1. You are completing the auditing of Ment Limited (ML) for the year ended 20x0 and have compiled a list of errors that your audit team has found in the course of audit work:

• A sale of $23,000 was recorded in 20x0, but the term of the sale was FOB destination and the shipment was not received by the customer until 20x1.
• ML recorded inventory using FIFO, but the appropriate method for the company to follow was the weighted-average cost method. As a result, inventory was understated by $9,400. The offset was to COGS.
• Vacation pay was understated by $2,700 due to a transposition error.
• Accrued expenses were overstated by $18,000.
• ML erroneously recorded depreciation using the straight-line method, instead of the declining balance method. This resulted in an overstatement of $7,800 in depreciation expense for the year.
• Assume the tax rate is 40%.
• Materiality is $10,000, after-tax, and the scope is $3,000.

Calculate the likely aggregate misstatement (after tax) for ML and type your answer into the box. An overall overstatement of the income statement should be entered as a positive number. An overall understatement of the income statement should be entered as a negative number.

(For example, if your answer is that the client has overstated the net income by $1,200, enter "1200". If your answer is that the client has understated the net income by $1,200, enter "-1200". Note: do not enter a dollar sign or comma.)

2. Show your calculations/work for the above question about Ment. Use a properly formatted table to show your work. You could either type directly into the below answer box or you can type your answer in Word/Excel and then cut-and-paste your answer into the answer box.

3. This question uses the facts from the Ment Limited question above.

Regardless of your LAM calculation for Ment Limited, assume for this part of the question that the LAM (after-tax) for the company was $22,000. What type of audit opinion would you give?

- Disclaimer or Adverse opinion

- Qualified Scope or Disclaimer of opnion

- Qualified Scope or Adverse opinion

- Qualified GAAP or Disclaimer of opinion

- Qualified GAAP or Qualified Scope opinion

- Qualified GAAP or Adverse opinion

4. Find an article from the past 12 months (online or in print) that deals with any two concepts which we have discussed in this class.

- Provide me with appropriate reference to the URL or the date/name of the journal.

- Write a short paragraph (3-6 sentences) about each of the two concepts you identified that relate to an auditing concept covered in the course.

For example, if you find an article that discusses an auditor being sued, you could discuss duty of care and auditor negligence. Or if you find an article involving an auditor who disclosed confidential information about a client, you could discuss the Code of Professional Conduct surrounding confidentiality and the whistleblower rule.

Answer rating: 100% (QA)

1To calculate the likely aggregate misstatement for Ment Limited ML we need to analyze each errors impact and then combine them Firstly the FOB sale e... View the full answer