Completing the Audit

You are about to conclude your first audit. Ms. Crawford asks you to begin the wrapping up process. Review the summary of significant items in the Board of Directors minutes discussed in the Eagle View Field Work document (

Actions

X – 1

Actions

)

Actions

. Write a memo documenting your assessment of these items. Be sure to address the following issues:

• Do any of these items need to be recorded in 2016? If so, prepare the necessary journal entries for the items.
• Do any of these items need to be disclosed in the footnotes in 2016?
• Should any mention be made in the audit report?
• Label your memo X – 2 to match the indexing in the Eagle View documents.

The next step in completing the audit is evaluating proposed adjustments. From the Proposed Audit Adjustments excel file Download Proposed Audit Adjustments excel file, you will add any adjustments from your work on the Accounts Receivable to Workpaper X-3. Next, you will review all the proposed adjustments to determine the materiality of each adjustment. Remember, Eagle View is a private company, not subject to the SEC. Which transactions should be booked and which can be passed? Consider the materiality quantitatively and qualitatively. Consider the materiality of each transaction individually and then of those below the threshold in aggregate. For materiality, use 1% of prior year’s Net Assets for the Balance Sheet accounts and 10% of prior year’s Net Income for Income Statement accounts. Note on X – 3 your decisions. Summarize the effect of your adjustments on the financial statements on X – 4.

The final step in this audit is the preparation of the audit report. You will forward your list of proposed adjustments (X – 3 and X – 4) to Ms. Dutra. She will discuss the proposed adjustments with Mr. Rosen and inform you of which adjustments he is willing to accept.

While you are waiting for Mr. Rosen’s decision, you should determine what type of audit opinion is most appropriate assuming Mr. Rosen agrees to accept all of the proposed adjustments.

How would the audit opinion change if none of the proposed adjustments were accepted?

Prepare a draft opinion for each possibility and label you memo X – 5. You may use any resource to formulate your opinion