ACCT555
Week 1 Homework

Problem 2-16

A. 2 International Auditing and Assurance Standards Board.
B. 2 Measures of the quality of the auditor’s performance.
C. 3 due professional care be exercised by the auditor.
D. 3 The criteria of audit planning and evidence gathering.

Problem 2-17

A. 2 having an appropriate system of quality control.
B. 1 Yes, Yes, Yes
C. 2 Yes, Yes Yes
D. 3 provide reasonable assurance that the integrity of the client is considered.

Problem 2-19

A. Engagement Performance
B. Monitoring
C. Acceptance and continuation of clients and engagements
D. Engagement Performance
E. Engagement Performance
F. Engagement Performance
G. Relevant ethical requirement
H. Human resources
I. Human resources
J. Leadership responsibilities

Problem 2-20

A. Olson and Riley seem to lack some confidence but when auditing they need to have confidence, knowledge and competence about all of the rules and regulations for filing with the SEC. In addition their firm should be registered with the PCAOB, they will not be considered independent under PCAOB and SEC independence requirements if they have done any consulting or accounting services with Howard Mobile Home.

B. After the financial statements are filed with the SEC they have to review them again to make sure everything is in order. The company will also have to complete an S-1 Form in addition to audited financial statements, they will also include a summary of business operations for the last five years. Each quarter subsequent to the filing, Form 10-Q must be filed, and within 90 days of the end of each fiscal year Form 10-K must be filed with the SEC. In addition, Form 8-K must be filed whenever significant events have occurred which are of interest to public investors. These forms must be filed in conformity with Regulations SOX, which requires considerable disclosures in addition to those normally required in audited financial statements.

Problem 3-23

A. 2 The report includes additional paragraphs for the definition and limitations of internal control.
B. 3 Completion of all important audit procedures.
C. 3 portion of the financial statements audited by the other auditor.

Problem 3-25

A. 3 a qualified “except for” opinion or adverse opinion.
B. 2 Management does not provide reasonable justification for a change in accounting principles.
C. 3 Qualified Opinion

Problem 3-26

A. “The financial statements referred to above present fairly in all material respects the financial position” rather than “The financial statements mentioned above are correctly stated.”
The statement about the statements “presenting fairly” means that they appear to be relatively accurate and if there are errors they are material in nature. If they were to word it that the financial statements are correctly stated leads me to believe that the financial statements are 100% accurate and in the world of accounting this is usually never be the case.

B. “In conformity with accounting principles generally accepted in the United States of America” rather than “are properly stated to represent the true economic conditions.”
The purpose of an audit is to make sure that the company being audited complies with