You are engaged to examine the financial statements of Spillane Company for the year ended December 31. Assume that on November 1, Spillane borrowed $ 500,000 from Second National Bank to finance plant expansion. The long term note agreement provided for the annual payment of principal and interest over five years. The existing plant was pledged as security for the loan. Due to the unexpected difficulties in acquiring the building site, the plant expansion did not begin on time. To use the borrowed funds, management decided to invest in stocks and bonds and on November 16, invested the $ 500,000 in publicly traded securities. Required: Develop specific assertions (audit objectives) related to securities (assets) based on management’s five (PCAOB) general assertions.
Answer to relevant QuestionsProfessional Certification. Visit the website of the Institute of Internal Auditors (www.theiia.org), the Institute of Management Accountants (www.imanet. org), The Association of Certified Fraud Examiners (www.acfe. com), ...Why is continuing education required to maintain certification? Define professional skepticism and professional judgment. During what stages of the audit are auditors required to demonstrate these characteristics?What factors should auditors consider in deciding whether to accept or continue the engagement with a particular client? What should firms do if they decide to withdraw from an engagement? Which of the following procedures would provide the most reliable audit evidence? a. Inquiries of the client’s internal audit staff. b. Inspection of prenumbered client purchase orders filed in the vouchers payable ...
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