A Public Accountant (PA) was recently promoted to senior accountant. He was put in charge of...

 

Transcribed Image Text:

A Public Accountant (PA) was recently promoted to senior accountant. He was put in charge of the audit on a grocery store, Mellow Markets, because of his experience with other grocery clients. This is the first year Mellow Markets was audited. Mellow Markets intends to take its audited financial statements to a bank to secure a loan. Because this was the PA's first audit as a senior, bringing the job in on budget was an important objective for him. Since this was the first time Mellow Markets is to be audited, there was no prior year audit program for reference. The PA's experience with other grocery clients tells him that all grocery clients have the same operational and accounting practices. To save time, the PA used the audit program from one of his other grocery clients. There were two inexperienced staff assistants for the audit. The PA gave the assistants the audit program and told them to carry out the procedures in the program. As a senior, the PA's time is billed out at a much higher rate than that of the staff accountants. Therefore, it would be easier to meet the budget if the PA does not spend too much time on the audit. As a result, the PA supervised the assistants by calling them once a day from another audit on which he was working. When the staff accountants had difficulties understanding the program, such as the purpose of a procedure, how to carry out a procedure, appropriateness of a procedure, and possible missing procedures, he always gave clear instructions about how to carry out procedures in the program. He told the staff accountants not to worry about the program because a similar program is used for several other grocery client audits. After the staff accountants had completed all procedures in the program, the PA reviewed the work and was satisfied that all procedures in the audit program were properly carried out. He then submitted the job for review by the manager. Required: Is the audit properly done in according to both the general standards and the examination standards in the generally accepted audit standards? Why, why not? A Public Accountant (PA) was recently promoted to senior accountant. He was put in charge of the audit on a grocery store, Mellow Markets, because of his experience with other grocery clients. This is the first year Mellow Markets was audited. Mellow Markets intends to take its audited financial statements to a bank to secure a loan. Because this was the PA's first audit as a senior, bringing the job in on budget was an important objective for him. Since this was the first time Mellow Markets is to be audited, there was no prior year audit program for reference. The PA's experience with other grocery clients tells him that all grocery clients have the same operational and accounting practices. To save time, the PA used the audit program from one of his other grocery clients. There were two inexperienced staff assistants for the audit. The PA gave the assistants the audit program and told them to carry out the procedures in the program. As a senior, the PA's time is billed out at a much higher rate than that of the staff accountants. Therefore, it would be easier to meet the budget if the PA does not spend too much time on the audit. As a result, the PA supervised the assistants by calling them once a day from another audit on which he was working. When the staff accountants had difficulties understanding the program, such as the purpose of a procedure, how to carry out a procedure, appropriateness of a procedure, and possible missing procedures, he always gave clear instructions about how to carry out procedures in the program. He told the staff accountants not to worry about the program because a similar program is used for several other grocery client audits. After the staff accountants had completed all procedures in the program, the PA reviewed the work and was satisfied that all procedures in the audit program were properly carried out. He then submitted the job for review by the manager. Required: Is the audit properly done in according to both the general standards and the examination standards in the generally accepted audit standards? Why, why not?

Answer rating: 100% (QA)

ANSWER No the audit conducted by the Public Accountant PA on Mellow Markets does not adhere to both the general standards and the examination standard... View the full answer