Solution manual auditing and assurance services 13e by arens chapter 25

financial statements The additional evidence will enable the auditor to obtain a higher level of assurance regarding the items than is attained without expanding the audit procedures The individual items have a lower level of materiality because their magnitude is less than the overall financial statements Therefore, an amount that is not considered material to the financial statements as a whole may be material when applied to the three accounts being considered b The following additional tests are likely to be needed before the special report can be issued: Sales   Cutoff tests of sales may be expanded Depending upon the previous results, tests of controls and substantive tests of transactions for sales may be increased Net fixed assets  Examine physical existence of a sample of fixed assets  Determine if fixed assets are still on the books but not being used  Recalculate depreciation  Increase vouching of additions in the current year 25-13 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com 25-30 (continued) Inventory Increase the price test coverage of inventory value  It should be noted that the extent of these tests depends on the results attained in these areas in the audit, the amount of evidence gathered in the audit, and the client's internal controls The audit procedures above are vague because of this and are intended to be illustrative of the type of procedures that should be considered After-the-fact auditing has limitations in that some information cannot feasibly be recreated For instance, the auditor cannot extend test counts of inventory in order to verify the quantity of inventory In these cases the auditor must attempt to satisfy the objective by alternative methods c We have audited the schedules of sales, net fixed assets, and inventory valued at FIFO (as defined in the lease agreement dated between (lessor) and Sarack Lumber Supply Co.) of Sarack Lumber Supply Co for the year-ended These schedules are the responsibility of Sarack Lumber Supply Co's management Our responsibility is to express an opinion on the schedules based on our audit We conducted our audit in accordance with auditing standards generally accepted in the United States Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the schedules of sales, net fixed assets, and inventory valued at FIFO are free of material misstatement An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the schedules An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall schedule presentation We believe that our audit provides a reasonable basis for our opinion In our opinion, the schedules of sales, net fixed assets, and inventory valued at FIFO present fairly, in all material respects, the sales, net fixed assets, and inventory valued at FIFO of Sarack Lumber Supply Co for the year-ended , on the basis specified in the lease agreement referred to above This report is intended solely for the information and use of the boards of directors and management of Sarack Lumber Supply Co and (lessor) and should not be used for any other purpose 25-14 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com  Internet Problem Solution: Accounting and Review Services Committee 25-1 The Accounting and Review Services Committee (ARSC) is responsible for issuing standards for compilations and reviews of financial statement issued by nonpublic companies Visit the AICPA website [http://www.aicpa.org] and answer the following questions about the operations of this committee: How are individuals chosen to serve on the ARSC? Answer: According to the website: “The ARSC is a committee of seven members, all of whom are AICPA members Members are appointed to achieve an appropriate representation among small and medium firms actively involved in the provision of compilation and review services The Director, AICPA Audit and Attest Standards (the “Director”), in consultation with the ARSC Chair, nominates members of the ARSC The AICPA Board of Directors approves nominations for members of the ARSC.” How long must an exposure draft of a new standard (i.e., a new SSARS) be made available for public comment? Answer: According to the website: “In determining an appropriate public exposure period of a proposed SSARS, including the comment due date, the ARSC will take into consideration that the period from February through April 30 of any calendar year represents the traditional “busy season” for many practitioners Although the ARSC will attempt to limit having a comment period for a proposed SSARS end during the traditional “busy season”, the decision regarding the comment due date will take into account the complexity of the subject matter in the proposed SSARS as well as the circumstances surrounding the need for a new standard.” Must meetings of the ARSC be open to the public? Answer: In short the answer is “no.” The ARSC may find it necessary to hold private meetings to discuss matters of an administrative or confidential nature On the other hand, the ARSC may hold open meetings to discuss the issuance of a new SSARS or other matters that the committee believes are of interest to the public (Note: Internet problems address current issues using Internet sources Because Internet sites are subject to change, Internet problems and solutions may change Current information on Internet problems is available at www.pearsonglobaleditions.com/arens.) 25-15 To download more slides, ebook, solutions and test bank, visit http://downloadslide.blogspot.com ... Internet Problem Solution: Accounting and Review Services Committee 25- 1 The Accounting and Review Services Committee (ARSC) is responsible for issuing standards for compilations and reviews of... information and use of the boards of directors and management of Sarack Lumber Supply Co and (lessor) and should not be used for any other purpose 25- 14 To download more slides, ebook, solutions and. .. Internet problems and solutions may change Current information on Internet problems is available at www.pearsonglobaleditions.com /arens. ) 25- 15 To download more slides, ebook, solutions and test bank,