Mike Adams is an audit partner in a medium-sized public accounting firm and takes an active part
Question:
Mike Adams is an audit partner in a medium-sized public accounting firm and takes an active part in the conduct of every audit he supervises. He follows the practice of reviewing all working papers of subordinates as soon as it is convenient, rather than waiting until the end of the audit. When the audit is nearly finished, Adams reviews the working papers again to ensure that he hasn't missed anything significant. As he makes most of the main decisions on the audit, there is rarely anything that requires further investigation. When he completes the review, he prepares a pencil draft of the financial statements, gets them approved by management and has them typed and assembled in his firm's office. No other partner reviews the working papers because Adams is responsible for signing the audit reports.
REQUIRED
a. Evaluate the practice of reviewing the working papers of subordinates on a continuing basis, rather than when the audit is completed.
b. Is it acceptable for Adams to prepare the financial statements, rather than make the client assume the responsibility?
c. Evaluate the practice of not having a review of the working papers by another partner in the firm.
Step by Step Answer:
Auditing Assurance Services and Ethics in Australia an Integrated Approach
ISBN: 978-1442539365
9th edition
Authors: Alvin A Arens, Peter J. Best, Greg Shailer, Brenton Fiedler