On April 14. 2008, your CPA firm completed the fieldwork for the audit of O'Malley Corporation's...

 

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On April 14. 2008, your CPA firm completed the fieldwork for the audit of O'Malley Corporation's financial statements for the year ended December 31, 2007. O'Malley is a privately held company. Last year, your firm expressed an unqualified opinion on O'Malley's 2006 financial statements. Barrett and O'Connor. CPAS, performed the audit of the December 31, 2007 and 2006 financial statements of Tom's Supply Company, a consolidated subsidiary of O'Malley's. Barrett and O Connor completed the fieldwork on February 25. 2008, and issued its unqualified opinion on Tom's Supply Company on March 2, 2008. Tom's statements reflect total assets of $950,000 and s900,000 as of December 31, 2007 and 2006, respectively, and revenues of $1,845.000 and S1.650,000 for the years then ended During your amedit, you obtained the following information which doer not appear in the footmoter to O'Malley's 2007 financial statements: During 2007, O'Malley changed its method of valuing inventory from the First-In-First-Out method to the Last-In-First-Out method. O'Malley's management beleves the change provides a better matching of revenues and expenses, with which you concur. The change reduced ending inventory in 2007 by S248,000 and net income by $129,000. The effect of the change on 2007 is considered material, but not highly material. The effect of the change on prior years is immaterial. Required: Prepare the shared audit report to accompany O'Malley's 2007-2006 comparative financial statements. Include the report title, address, hedy, date, and your signature. On April 14. 2008, your CPA firm completed the fieldwork for the audit of O'Malley Corporation's financial statements for the year ended December 31, 2007. O'Malley is a privately held company. Last year, your firm expressed an unqualified opinion on O'Malley's 2006 financial statements. Barrett and O'Connor. CPAS, performed the audit of the December 31, 2007 and 2006 financial statements of Tom's Supply Company, a consolidated subsidiary of O'Malley's. Barrett and O Connor completed the fieldwork on February 25. 2008, and issued its unqualified opinion on Tom's Supply Company on March 2, 2008. Tom's statements reflect total assets of $950,000 and s900,000 as of December 31, 2007 and 2006, respectively, and revenues of $1,845.000 and S1.650,000 for the years then ended During your amedit, you obtained the following information which doer not appear in the footmoter to O'Malley's 2007 financial statements: During 2007, O'Malley changed its method of valuing inventory from the First-In-First-Out method to the Last-In-First-Out method. O'Malley's management beleves the change provides a better matching of revenues and expenses, with which you concur. The change reduced ending inventory in 2007 by S248,000 and net income by $129,000. The effect of the change on 2007 is considered material, but not highly material. The effect of the change on prior years is immaterial. Required: Prepare the shared audit report to accompany O'Malley's 2007-2006 comparative financial statements. Include the report title, address, hedy, date, and your signature.

Answer rating: 100% (QA)

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