Denise Norris is a manager at Fitch & Jones, LLP, a regional audit firm in Providence, Rhode Island. Norris is preparing for a meeting with Alan Morse, the controller of Rhody Electronics, a publicly held company in Providence. The meeting concerns a variety of questions raised by the controller about the audit as follows.

 

• Why wasn’t $1 million revenue recorded in 2016 for a December 31, 2016, transaction whereby Rhody agreed to sell $1 million of software to Ocean State Electronics in return for a stock issuance of that company? Ocean State, in return, agreed to sell $1 million of similar software to Rhody on January 5, 2017, in return for a stock issuance from Rhody.
• Why does the firm need to do additional testing of the collectability of receivables beyond that included in the original audit plan?
• Why has the firm hired a consultant to help with the audit of the company’s information systems

 

Norris has decided to use the occasion to raise a few issues with Morse as follows:

 

• Documents are not being provided in full or on a timely basis, thereby requiring extra time and effort to complete the audit.
• Inquiries are being ignored; answers are often unhelpful; and some staff in the accounting department seem to resent those questions.
• Why did Morse request a staff member be removed from the audit team citing irreconcilable “personality” differences?

 

Question:

What role should the client have in raising issues related to auditors’ planning and execution of the engagement? Support your answer using ethical reasoning.

Answer rating: 100% (QA)

Answer Audit planning is a process of deciding in advance what is to be done who is to do it how it ... View the full answer