Each of the situations below should be viewed independently. A. During the course of the audit of

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Question:

Each of the situations below should be viewed independently.

A. During the course of the audit of a corporation’s financial statements, a CPA is refused permission to review the minutes of board of director meetings that document significant decisions of the board. The corporation secretary offers to give the CPA a certified copy of all resolutions and actions involving accounting matters.

B. A CPA is engaged in the audit of a large merchandising company with stores in many cities. The CPA was not able to count the substantial undeposited cash receipts at the close of business on the last day of the fiscal year at all the stores. As an alternative, to verify the cutoff assertion on cash receipts, the CPA observed that deposits in transit on the year-end bank reconciliation appeared as credits on the bank statement on the first business day of the new fiscal year. He was satisfied as to the cutoff of cash receipts by this alternative procedure.

C. On January 2, 2019, the Bounty Fabric Company received a notice from its main supplier that effective immediately, all wholesale prices will be increased 10%. Bounty Fabric revalued its December 31, 2018 inventory to reflect the higher costs based on the notice. The inventory constituted a material proportion of total assets; however, the effect of the revaluation was material to current assets but not to total assets or net income. The increase in valuation is adequately disclosed in the footnotes.

D. A CPA has completed the audit of a airline for the year ended December 31, 2019. Prior to 2019, the company depreciated its planes over a 15 year life with a 20% residual value. During 2019, the company determined that a 20 year life with a 15% residual value was a more realistic estimate. The airline computed the 2019 depreciation based on the new estimate. The CPA believes this new estimate is reasonable.

E. Approximately 20% of the audit of Waverly Place was performed by a different CPA firm, selected by you. You have reviewed their audit files and believe they did an excellent job on their portion of the audit. Nevertheless, you are unwilling to take complete responsibility for their work.

F. A number of food trucks have opened in the last few years and your client, Pizza in a Box, who runs a fleet of food trucks, has experienced a noticeable decline in customer traffic over the past several months that has caused you to have substantial doubt about Pizza in a Box’s ability to continue as a going concern.

For each situation above, complete the following: Condition that requires a deviation from standard unqualified opinion (if any) Level of materiality – Immaterial, Material, or Highly material Appropriate Audit report Explain your rationale for your audit report selection.