auditing & assurance service
19-35 Your supervisor tells you that for the next month you will be working on an auditor entity with a controller who loves to talk. She explains that the entity will want you to spend an hour or so talking about politics, sports, and life’s mysteries and you need to keep him happy, she also wants you to follow the time budge, which was based on prior years when those in your position would take work home each night to stay on budge. The prior auditors didn’t record the “social “ time at the entity. Will you record all of your time, including “social” time, or only the time associated with the technical work of the audit?
Required:
1. Analyze this situation with its possible outcomes using
A. the utilitarian theory
The righty-based approach
The justice-based approach
2. Which approach do you feel is most appropriate in this situation, and why
18-28
The following auditor’s report was drafted by a staff accountant of Nathan and Matthew, CPAs, at the completion of the audit of the comparative financial statements of Monterey Partnership for the years ended December 31, 2013 and 2012. Monterey is a privately held company that prepares its ?nancial statements on the income tax basis of accounting. The report was submitted to the engagement partner, who reviewed matters thoroughly and properly concluded that an unquali?ed opinion should be expressed.
Auditor’s Report
We have audited the accompanying statements of assets, liabilities, and capital— income tax basis of Monterey Partnership as of December 31, 2013 and 2012, and the related statements of revenue and expenses—income tax basis and changes in partners’ capital accounts—income tax basis for the years then ended.
We conducted our audits in accordance with standards established by the American Institute of Certi?ed Public Accountants. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the ?nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the ?nancial statements. An audit also includes assessing the accounting principles used as well as evaluating the overall ?nancial statement presentation.
As described in Note A, these financial statements were prepared on the basis of accounting the Partnership uses for income tax purposes. Accordingly, these ?nancial statements are not designed for those who do not have access to the Partnership’s tax returns.
In our opinion, the ?nancial statements referred to above present fairly, in all material respects, the assets, liabilities, and capital of Monterey Partnership as of December 31, 2013 and 2012, and its revenue and expenses and changes in partners’ capital accounts for the years then ended, in conformity with generally accepted accounting principles applied on a consistent basis.
Nathan and Matthew, CPAs
April 3, 2014
Required
Identify the errors and omissions in the auditor’s report as drafted by the staff accountant. Group the errors and omissions by paragraph, where applicable. Do not redraft the report.
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