“Working papers should contain facts and nothing but facts,” said student A. “Not at all,” replied student B. “The audit working papers may also include expressions of opinion. Facts are not always available to settle all issues.” “In my opinion,” said student C, “a mixture of facts and opinions in the audit working papers would be most confusing if the papers were produced as a means of supporting the auditors’ position when their report has been challenged.” Evaluate the issues underlying these arguments.
Answer to relevant QuestionsMultiple Choice QuestionsSelect the best answer for each of the following questions. Explain the reasons for your selection.a. Which of the following is not a financial statement assertion made by management?(1) Existence of ...During your examination of the accounts receivable of Hope Ranch, a new client, you notice that one account is much larger than the rest, and you therefore decide to examine the evidence supporting this customer’s account. ...Marshall and Wyatt, CPAs, has been the independent auditor of Interstate Land Development Corporation for several years. During these years, Interstate prepared and filed its own annual income tax returns.During 20X6, ...What disclosures should be made in the financial statements regarding material related party transactions?Discuss what is meant by the phrase “shopping for accounting principles.” What mechanisms have served to prevent this practice by management?
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