Exam 13: Completing and Reporting on the Audit

Governance relates to

Identify quantitative and qualitative considerations that are taken into account when the auditor evaluates whether misstatements either cause financial statements to be materially misstated or require additional disclosure.

Discuss the factors that are relevant when management is assessing the going concern assumption.

When an auditor expresses an unqualified audit opinion, it means the

Sufficiency relates to the quality of audit evidence gathered.

Material disagreements with management will result in either:

An error is an intentional misstatement in the client's financial statements.

The final phase of an audit includes which of the following?

An auditor may prepare or provide an opinion on information other than general purpose financial statement information, on all the following engagements except

Indicate whether you agree or disagree with the following statements and explain your reasoning. a) Mathew Punkinnen, the senior auditor at Jackson & Wartkauf LLP made the following statement to his audit team: "What constitutes sufficient appropriate audit evidence is a matter of judgment." b) Ingram Foods Company operates as a specialty food distributor. Philippe Parenteaux, auditor, has told his staff that the bankruptcy of a customer at year-end should not be considered a type 1 event. c) Manitoba Ice Dogs auditor Henry Pilon found an omission of a disclosure in the financial statements of the hockey team. He called this an error. d) Janice Olympus was told by the client that a limitation in the scope of his work would require a modification to the audit report.

Type 1 subsequent events are events that

Matters of governance that the auditor may wish to discuss with those charged with governance include any practical difficulties encountered in performing the audit.

Which of the following dates is least relevant when considering subsequent events?

Mark Danyluk, the partner in charge of the Bombardier Aerospace audit, was reviewing the work his team had completed. Bombardier is a Canadian company. They used to be involved in recreational equipment such as Ski-Doo snowmobiles and Sea-Doo watercraft. Their Aerospace division, however, is probably their best known operating segment and is known as a leading manufacturer of commuter jets containing 50-100 seats. Bombardier's operations were by far the largest of the aerospace companies in Montreal and several of the new programs were very ambitious and very risky. It seemed to Mark that every review he performed had material misstatement possibilities. Mark was thinking that an audit of this magnitude was challenging his abilities in evaluating what was sufficient and appropriate audit evidence. When Mark started the audit of the current year's operations, he was surprised with the events that took place in 2015 at the Bourget and Farnborough air shows. The anticipation for Bombardier's new CSeries aircraft turned out to be less than positive as other manufacturers seemed to pile up the orders. Airbus executives had also been claiming for months that their company's introduction of a new engine option (NEO) for the A320 narrowbody voided the business case for the CSeries. Although Bombardier has been able to get commitments up to 100 aircraft, the company is only one-third of the way to its goal of 300 orders for the CSeries scheduled service entry in late 2017. This also still leaves Bombardier 350 aircraft short of the sales required for the project to break even. As Bombardier attempts to expand its aircraft product line into medium-sized aircraft (100-149 seats), it is entering a space that is getting very close to the market segment dominated by industry giants, Boeing and Airbus. While those companies tend to focus on even larger aircraft, they may want to protect themselves by defending against Bombardier in the medium-sized aircraft segment because Bombardier could later expand into the lucrative large-aircraft segment. Bombardier's $3.4-billion bet on the market for narrow-bodied aircraft faces a potential threat: a price war instigated by Boeing Co. and Airbus SAS. Mark Danyluk had an uneasy feeling about the viability of the Aerospace sector of the company's operations. Required: a) Describe the factors that Mark Danyluk and his firm will have to consider in evaluating the sufficiency and appropriateness of audit evidence at Bombardier Aerospace. b) What factors are relevant when management assesses the going concern issue at Bombardier?

Explain the difference between management's and the auditor's responsibility for the financial statements.

When misstatements or deviations from controls are found in planned procedures, consideration should always be given to:

The components of an audit report include all of the following except

The client's compliance with contractual requirements of operating agreements is an example of a qualitative factor that may cause misstatements of quantitatively immaterial amounts to be considered material.

When Sydney Burns was unable to perform work on inventory because of a client's insistence that she not perform an inventory taking, what kind of audit opinion would she most Likely consider?

Which of the following are included in the main components of the auditor's report?