During the audit of ABC Corporation, the auditor found a purchase from a vendor that was not on the approved vendor list. The transaction was the purchase of land that was later sold for a loss of $60,000. The purchase and sale were both completed within 2 weeks. The auditor advised the controller about this transaction, as the company normally would not have any transactions in land, as ABC manufactures plastic components for small tools. The controller told the auditor that he was aware of the transaction and apologized for not telling the auditor about it. He stated that he had sold the land as soon as he found out about the purchase and did not tell anyone about it as he did not want to cause trouble for the employee who had mistakenly made the purchase. He stated that the former purchasing manager who had authorized the purchase was now retired, so the problem would never happen again. He asked the auditor not to check into the transaction and not to contact the vendor or the person who bought the land from ABC, as it was below materiality.

Required

Explain why, besides independence issues, the auditor should discuss the land transaction with the audit committee.

Answer rating: 100% (QA)

Solution Psovision As Communicarthing De ficiencies Intey nal Conbrol and mana gement ISA 265 per to ... View the full answer