AUDITING PRACTICE QUESTIONS

SHORT CASE

PLEASE ANSWER PART 1-3

It has been said that auditors must be independent in fact and in reality, because they must not be seen to favor one group such as shareholders over potential investors and providers of capital such as suppliers and banks. You are in a meeting where the CEO states that he cares more about giving "shareholders value" and therefore does not care about others. You are to take a position in favor of the CEO's statement and argue in his support or take a position against his statement. Required; Outline your reasons for or against (in form of bullet points). 2. Why might a company refuse to accept an audit engagement of a firm? What factors would be compelling and why? 3. The pre-acceptance evaluation of a prospective audit engagement normally focuses on three factors: 1) personal integrity of the prospective client's management and principals, 2) presence of circumstances pointing towards unusual risks in the engagement or 3 matters requiring special attention about practices of management. Required: Of the three concerns, which one will be too problematic for you as an external auditor. Briefly explain