Diego has come to you because he is worried about recovering the cost of his share of
Question:
Diego has come to you because he is worried about recovering the cost of his share of a law firm partnership. His partner, Emmanuelle, is exercising the "shotgun" clause in their partnership agreement and wants to buy him out. Over the last two years, Diego and Emmanuelle have had numerous battles over the way that Diego handles his accounts receivable. Diego is lenient with his customers and has converted many of his accounts into long-term notes extending two and three years into the future. He is confident that these amounts are collectible because every one of his clients continues to make small monthly payments.
Diego thinks that Emmanuelle may have been hiding profits from him and collecting some of her accounts in cash. He wants you to audit the books so that he can figure out what the "true" profits are and how much Emmanuelle should pay him for his share of the partnership.
Required:
A) Explain to Diego what you would be able to do during the audit engagement.
B) List the management assertions that may have been violated. Justify your answer.
Financial Accounting Tools for Business Decision Making
ISBN: 978-1119368458
7th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine