Auditing Concepts ZZZZ Best Company‚ Inc Case Solutions: 1. A review is performed to obtain a reasonable basis for providing limited assurance that the client’s financial statements have been prepared in conformity with generally accepted accounting principles. An independent audit is designed to provide a reasonable basis for expressing an opinion concerning whether or not a client’s financial statements have been prepared in accordance with generally accepted accounting principles.
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restoration contracts across several companies in the same industry. If he would have performed these routine procedures‚ Gray would have realized that ZZZZ Bests reported insurance restoration revenue was grossly overstated. Furthermore‚ AS No.9.7 states that the auditor should have knowledge of the “company’s internal control over financial reporting obtained during other engagements performed by the auditor.” Larry Gray did obtain any information regarding ZZZZ Bests internal control over financial
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Case Study – ZZZ Best‚ Inc. 1. Ernst & Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for three months ended July 31‚ 1986. How does a review differ from an audit particularly in terms of the level of assurance implied by auditor’s report? A quarterly review report is issued by a CPA and reviewed by an auditor to provide assurance that the financial statements are fair and follow the GAAP standards. Quarterly
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ZZZZ Best case case1.9 Q1 There are three different levels of services you could obtain from a certified public accountant. These are referred to as compilation‚ review‚ and audit. There are significant differences between the objectives of an audit of financial statements in accordance with generally accepted auditing standards and the objectives of a review in accordance with statements on standards for accounting and review services. The objective of an audit is to provide a reasonable basis
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Case 1.9 Question 1: Ernst & Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for the three months ended July 31‚ 1986. How does a review differ from an audit‚ particularly in terms of the level of assurance implied by the auditor’s report? Answer: A review report does not assess the control risk of a company‚ which means Ernst & Whinney could have not gotten the proper risk that a material misstatement
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Case 1.9: ZZZZ Best Company‚ Inc. 1. A review differs from an audit because a review does not allow the auditor to test or observe internal controls and assess control risk. According to AS 5‚ effective internal control over financial reporting provides reasonable assurance regarding the reliability of financial statements. As a result‚ an auditor cannot provide reasonable assurance regarding the reliability of the financial statements by just completing a review; they must complete a full audit
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banks‚ and whoever else that was interested in the success of a small carpet cleaning company that made it big. Like all frauds they eventually get blown wide open. In this case it was a young female journalist writing a filler piece on Barry Minkow’s success. When tying the story up she decided to make a call to the city just to verify their contractor’s license number‚ which never existed. The ZZZZ Best case is relevant for getting into the field of auditing and forensic accounting work because
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Case Study: ZZZZ Best Company‚ Inc. 1. Ernst & Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for three months ended July 31‚ 1986. How does a review differ from an audit particularly in terms of the level of assurance implied by auditor’s report? Although a review is similar to an audit‚ it differs from an audit in its limited scope and assurances. The objective of an audit is to provide a reasonable
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responses to inquiries by obtaining corroborating evidence through inspection‚ observation or any other audit procedure. It can point out significant matters of the financial statements but does not provide assurance of their accuracy. The issue with ZZZZ Best case is that the auditors review was not sufficient enough to review any misstatements on the financial statements. Ernst & Whinney never questioned the internal control‚ reviewed contractual agreements or made comparison of the previous statements
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ZZZZ Best Company Case Ernst and Whitney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for the three months ended July 31‚ 1986. How does a review differ from an audit‚ particularly in terms of the level of assurance implied by the auditor’s report? While both a review and an audit are attestation services provided by CPAs. A review and an audit differ in that a review does not offer the level of assurance
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