Good Case Study About Auditing

- I disagree with the conclusion. If the lawyer is silent on certain matters of audit conclusion, the auditor should not assume the matter as complete. Instead the auditor should conduct an inquiry and get more details regarding the matter. Maintaining silence on an issue does not mean that the response is complete.
- In the given case, the conclusion is correct. If the lawyer does not provide the probable outcome of the given case, the auditor can specify it in the notes to financial statements and assume that the scope is restricted. Even after the request of the auditor, the lawyer does not provide the information which has been requested for the audit, the auditor cannot push the lawyer any further and inform the clients that the information was not made available due to which the scope of audit has been restricted.
- The auditor should ensure that an amount is disclosed as a contingent liability. The amount can be determined by the management and should be included in the balance sheet as well as in the notes to the financial statement. On the basis of conservatism, the company is required to recognize any expected expense and show as contingent liability. Hence the auditor should not issue an unqualified statement because the amount is not disclosed in the balance sheet. I disagree with the conclusion. The auditor should make sure that the contingent liability is clearly shown.
- I disagree with the conclusion. A written statement is a proof about the conclusion. In any situation, a written statement is better as compared to an oral one. The auditor is required to take a written statement from the client’s legal counsel to support the statement. It is always better to maintain a written record to support any matter that has been discussed between the auditor and the legal counsel.
- I agree with the conclusion. Though the company has taken time to reply to auditors query, it can be assumed that the company has fully disclosed the relevant material. XYZ Company has been engaged with JJH&1I for a long period of time. Hence reliance can be placed on the audit query answered by the company. Though it is advised to the auditor to conduct his audit procedures and ensure that the company has provided full and true information on the matters. Complete reliance can be placed only after the auditor has carried out the procedures to ensure that the company has indeed made a true disclosure. Past records can be reviewed to help in this matter.