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Auditing and Assurance Services 9th Edition by Alvin Arens,Mark Beasley,Randy Elder
Edition 9ISBN: 978-0130459206Auditing and Assurance Services 9th Edition by Alvin Arens,Mark Beasley,Randy Elder
Edition 9ISBN: 978-0130459206 Exercise 2
You recently attended your five-year college reunion. At the main reception, you encountered an old friend, Lee Beagle, who recently graduated from law school and is now practicing with a large law firm in town. When you told him that you are a CPA and employed by a regional CPA firm, he made the following statement: "You know, if the securities acts had not been passed by Congress in the 1930s, no one would be interested in having an audit performed."
Required:
Draft a memo that highlights your thoughts about Lee's statement that audits only take place because they are required by law.
Required:
Draft a memo that highlights your thoughts about Lee's statement that audits only take place because they are required by law.
Explanation
Verified
Verified
MEMO:
Memo is a short form of memorandum. It is an informal summary used as a means for communication or to summarize the terms of any agreement.
Auditing is an independent examination to obtain a reasonable assurance of the financial accounts and the supporting records of the client to show that they are free from material misstatements.
Auditing also ensures the financial statements and the disclosures show the true and fair view of the concern.
Draft a memo to summarize the requirements of audit as shown below:
Memorandum
To L,
From: xxx
Date: September 27, 2016
Subject: Requirements of audit
Apart from the requirement of law, auditing is performed for other reasons as mentioned below:
• The audited financial statements provide reliable information to the stakeholders in vital decision making.
• Auditing provides more reliable, credible, and relevant information compared to the un-audited sources. Therefore, stakeholders can assess the actual performance of the management.
• Auditing enables a proper functioning of the economic system.
Before the commencement of Securities Act 1933 and 1934, 82% of the companies in New York Stock Exchange were audited.Therefore, in the past the audits were performed even without the enactment of the securities acts.
Yours Faithfully,
xxx.
Memo is a short form of memorandum. It is an informal summary used as a means for communication or to summarize the terms of any agreement.
Auditing is an independent examination to obtain a reasonable assurance of the financial accounts and the supporting records of the client to show that they are free from material misstatements.
Auditing also ensures the financial statements and the disclosures show the true and fair view of the concern.
Draft a memo to summarize the requirements of audit as shown below:
Memorandum
To L,
From: xxx
Date: September 27, 2016
Subject: Requirements of audit
Apart from the requirement of law, auditing is performed for other reasons as mentioned below:
• The audited financial statements provide reliable information to the stakeholders in vital decision making.
• Auditing provides more reliable, credible, and relevant information compared to the un-audited sources. Therefore, stakeholders can assess the actual performance of the management.
• Auditing enables a proper functioning of the economic system.
Before the commencement of Securities Act 1933 and 1934, 82% of the companies in New York Stock Exchange were audited.Therefore, in the past the audits were performed even without the enactment of the securities acts.
Yours Faithfully,
xxx.
Auditing and Assurance Services 9th Edition by Alvin Arens,Mark Beasley,Randy Elder
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