Assignment 5: LASA 2: Audit Planning Report

Apr 24th, 2015
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Assignment 5: LASA 2: Audit Planning Report As the partner in charge of audits at Dewey, Wright, and Moore, you have decided to accept AV Imports and Exports as a new audit client. You have gone through all necessary planning, such as the requirements of SAS 56 as well as other pronouncements. You are now at the stage of preparing a planning memorandum. You have been working on the audit engagement of the company for the previous year-end, and you are in the final stages of completing the audit. You plan to have all the fieldwork completed and the report signed by May 10 of the current year. You are concerned about some transactions that have occurred just after year-end that may affect the financial statements you are auditing. You are aware that this area is governed by Statement of Financial Accounting Standards (SFAS) 165. You research the details of the standard. Prior to accepting the audit, you became aware that the company’s financial statements may have been misstated due to the

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Audit PlanningName:Tutor:Date:Subsequent EventsThere two types of subsequent events that have to be considered in undertaking the auditing procedure as required under the Statement of Financial Accounting Standards (SFAS) 165. One of the subsequent events that have to be considered in undertaking the auditing process is the recognized subsequent event. The recognized subsequent event entails recognizing all subsequent events in the financial statements that give additional evidence about conditions existing at the balance sheet date (FASB, 2009). The conditions recognized under the subsequent event include inherent estimates that applied in the financial statements preparing the process. One of the examples of the recognized subsequent events is realization that a given clients due to financial condition will be unable to settle the receivables before the balance sheet date and has not been reflected in the financial statements. The other subsequent event that is recognized is the non-recognized subsequent events (Rawindara & Sharma, 2011). The SFAS 165 provides that subsequent events providing evidence that at the date of balance sheet some conditions did not exist, but occurred after the date of balance sheet when the financial statements have not been issued should not be recognized by an entity. Auditing procedure In undertaking the auditing task of the given company, it is vital to follow a given procedure that is capable of unraveling potential subseque

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