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Questions & Answers On The Case Of Audit Assignment

2 Table 1 American Accounting Association model American Accounting Association Model Decision-making process 1. Determine the facts The study developed in the audit assignment based on the given case scenario depicts that jack identified the material cut-off error, by which revenue would materially overstate. Jack wants to document any material adjustment in the working paper, however, management of Switch Ltd does not want any adjustment. Further, Bruce also told Jack not to mention any working paper because it assists in disappointment in an audit client, and for meeting deadlines, and they want to complete things very soon. 2. Define the ethical issues According to Australian Professional and Ethical Standard Board 110- Code of Ethics, it is required by auditor to comply with integrity, objectivity, due care, and confidentiality at the time of audit of financial statement. In the present situation discussed herein audit assignment, the initial aspect is related to the integrity of the auditor. It is required by auditor to express a true and fair opinion on the basis of findings in the financial statement of the company (Zhang, Pei, & Vasarhelyi, 2017). Further, they have an obligation to provide a report for correct information in their reports for investors as well as creditors. Another ethical issue present in this case scenario is related to objectivity. It is required by the auditor that they should be unbiased and impartial at the time of reporting. Along with this, it is the responsibility of the auditor to maintain due diligence at the time of carrying activities (Rodgers, & Al Fayi, 2019). In the given case, even if ascertainment of material misstatement, auditor deny to make any adjustment in working paper and also would not want to upset audit client. All these activities assist in raising objectivity and integrity issues to the auditor. 3. Identify the major principles, rules, and values This situation explored in the audit assignment creates the connection between plaintiff and defendant of legal duty or the respondent may owe the plaintiff a lawful responsibility to carry their activities with reasonable care. It is the duty of the auditor to express a true and fair opinion on the financial statement only if it is free from material misstatement. Along with this, the audit should be based on professionalism (Schmidt, Wood, & Grabski, 2016). Another principle that is required to be followed by the auditor is maintaining impartiality in audit and objectivity (Pratt, & Peters, 2017). 4. Specify the alternatives As per Auditing Standard 700, auditor can express modified opinion of financial report when they believe that financial statement does not present true and fair view. Therefore, in present case scenario, auditor can express a modified opinion on the financial statement. 5. Compare values and alternatives All the activities such as ignoring mentioning of adjustment of material error identified by which revenue would be enhanced is not appropriate. Further, for the satisfaction of audit client and completion of task in a quick manner, it is not proper to express an incorrect opinion on the financial statement. Therefore, by expressing a modified opinion on the financial statement, the user of financial statement can aware about such misstatement in the financial reports (Farooq, & De Villiers, 2017). 6. Assess the consequences As per ASA 710, it is noted herein audit assignment thatauditor should take into account the prior period audited financial statement for expressing opinion on current financial statement. Therefore, the consequences of this alternative is even if prior auditor would terminate, then also newly appointed auditor would consider prior period audited financial statement and ask from management regarding reasons modified opinion on the financial statement. 7. Make your decision Based on the above aspects provided within this audit assignment, it has been decided that modified opinion should be expressed on the financial statement. Since, financial statement are not free from material misstatement, therefore by application of ASA 700 modified opinion should be expressed on financial statement. References Barr-Pulliam, D., Brown-Liburd, H. L., & Sanderson, K. A. (2017). The Effects of the Internal Control Opinion and Use of Audit Data Analytics on Perceptions of Audit Quality, Assurance, and Auditor Negligence. Audit assignment Assurance, and Auditor Negligence (August 17, 2017). Bigus, J. (2016). Optimism and auditor liability. Accounting and Business Research, 46(6), 577-600. Brasel, K., Doxey, M. M., Grenier, J. H., & Reffett, A. (2016). Risk disclosure preceding negative outcomes: The effects of reporting critical audit matters on judgments of auditor liability. The Accounting Review, 91(5), 1345-1362. Farooq, M. B., & De Villiers, C. (2017). Assurance of sustainability and integrated reports. In Sustainability Accounting and Integrated Reporting (pp. 149-162). Routledge. Maksymov, E. M., & Nelson, M. W. (2017). Malleable standards of care required by jurors when assessing auditor negligence. The Accounting Review, 92(1), 165-181. Pratt, S., & Peters, E. (2017). Internal audit: Raising the bar in auditing financial crime risk. Audit assignment Journal of Financial Compliance, 1(3), 237-244. Rodgers, W., & Al Fayi, S. (2019, April). Ethical pathways of internal audit reporting lines. In Accounting Forum (Vol. 43, No. 2, pp. 220-245). Routledge. Schmidt, P. J., Wood, J. T., & Grabski, S. V. (2016). Business in the cloud: Research questions on governance, audit, and assurance. Journal of Information Systems, 30(3), 173-189. Wright, A. M., & Wu, Y. J. (2018). The impact of auditor task difficulty and audit quality indicators on jurors' assessments of audit quality. Behavioral Research in Accounting, 30(2), 109-125. Zhang, L., Pei, D., & Vasarhelyi, M. A. (2017). Toward a new business reporting model. Journal of Emerging Technologies in Accounting, 14(2), 1-15. Online Legislation and standards (2020). Audit assignment Retrieved from

Subject Name: Audit

Level: Undergraduate

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