Eyemax Corporation: Evalution of Audit Differences

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Completing the audit, Reporting to Management, and External Reporting
C A S eS INC LU De D IN T h IS Se CTION

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369 379 385 391 395

12.1 EyeMax Corporation 12.2 Auto Parts, Inc. 12.3 K&K, Inc.

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Evaluation of Audit Differences
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Considering Materiality When Evaluating Accounting Policies and Footnote Disclosures
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Leveraging Audit Findings to Provide Value-Added Insights
. . . . . . . . . . . . . . . . . . . . . .

12.4 Surfer Dude Duds, Inc.

Considering the Going-Concern Assumption
. . . . . . . . . . . . . . . . .

12.5 Murchison Technologies, Inc.

Evaluating an Attorney’s Response and Identifying the Proper Audit Report

INStRUCtoR RESoURCE MaNUal — Do Not CoPy oR REDIStRIbUtE

INStRUCtoR RESoURCE MaNUal — Do Not CoPy oR REDIStRIbUtE

EyeMax Corporation
Evaluation of audit Differences
INS TR UC T IONAL O b je C T Ive S
[1] [2]

C aS E

12.1

Mark S. Beasley · Frank A. Buckless · Steven M. Glover · Douglas F. Prawitt

[3]

To illustrate issues associated with completing the audit. To illustrate the degree of judgment and negotiation involved in requiring clients to book adjustments to their financial statements. To revisit the concepts of tolerable misstatement, materiality, and audit sampling.

[4]

[5] [6]

This case is designed to help students decompartmentalize their sampling knowledge from their general business and audit knowledge. To illustrate differences in “hard” versus “soft” (e.g., estimates based on judgment) adjustments. To illustrate the importance of projected misstatement and sampling risk in the evaluation of misstatements detected in sampling applications.

KEY FACTS
ƒƒ EyeMax is engaged in research and development, manufacture and sale of medical devices used by ophthalmologists during eye surgeries. Customers of the



References: Custer & Custer, LLP February 17, 2009 Custer & Custer, LLP February 17, 2009 Custer & Custer, LLP February 17, 2009 [e] Assume that you convinced management to disclose the contingency in the footnotes to the December 31, 2008 financial statements and that your audit report on those financial statements was a standard, unqualified audit report Custer & Custer, LLP February 17, 2009

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