Team Collapse at Richard

An “audit failure” is a situation in which a professional auditor fails to detect a material error in the financial statements of the company they are auditing. The audit failure in the situation of Rita Crundwell the failure was exacerbated by the fact that the auditors continually signed off on the misstated statements for years. Crundwell is responsible for many of the deficiencies mentioned, such as the missing funds and the incorrect invoices. However, she is not the sole person responsible for this fraud. The lack of internal control is to blame, and this cannot be placed on a single person. The government should have separated duties and used

Appendix A.2 also lists several factors that could provide opportunities for management/employees to commit fraud. One factor that could lead to fraud is if, “There is ineffective monitoring of management as a result of: domination of management by a single person or small group without compensating controls.” The auditors should have taken notice of the lack of controls and segregation of duties with respect to Phar-Mor’s

Chapter five marks the beginning of Jack’s career at The Firm. It is on this day that he is introduced to the “Bearisms.” Bearisms were a list of unwritten rules and sayings The Bear, Quentin Barnes, had compiled over his years with The Firm. Two weeks later, Jack was headed to a national training center for The Firm. Upon returning from his training trip, Jack sets out on his first audit engagement to the Bakersfield Cement Plant. On his first engagement, Jack discovers two problems. First, he finds out that a clerk had “borrowed” money out of the petty cash box, and that the money is missing. Second, he discovers that another employee has been adjusting inventory numbers. This first audit experience serves as a great learning experience for students because it gives them an idea of what could happen on your first audit. Jack showed that although it was his first audit, he was going to make sure he did the right thing to address both issues. To conclude the chapter, Jack states that he left Bakersfield feeling that he “had not only learned a lot, but had done a good job as well.” This story helps the student to understand the full process of an audit and know what to do if problems are discovered. The chapter as a whole displays to the student how a new hire goes through the training process and then begins on their first audit. This allows the student to form an idea of what to expect when they begin their careers at their respective firms.

What could John Peters and the other auditors do to better handle the demands of career and family life?

3. Substantive tests procedures: The audit team should perform substantive tests on Smackey’s accounting transactions and

As indicated by PCAOB, the written representation cannot be a substitute for substantive procedures. Thus, auditors did not perform adequate procedures to test the management’s estimates. What’s more, inquires were heavily relied on the management’s integrity. Auditors ignored the professional skepticism. Finally, the 30 years and 15 years useful lives, which were adopted previously by Little Drummer, were not appropriately audited. Since the engagement team did not contact the predecessor auditors, the team did not get any audit documents from predecessor auditors regarding the assumptions of 30 years and 15 years. There was no evidence to show the reasonableness of these two assumptions.

I believe that the term “engagement risk” implies that inherent client-specific risks face an auditor throughout the course of an audit, thus creating a risk that the auditor will be unable to successfully assess and manage these risks in the performance of the engagement and properly issue an appropriate opinion. The auditor must understand these client-specific risks, which include, but are not limited to, significant

CAS 300 requires auditors to their audit using a risk based model where the nature, timing and extent of audit procedures are based on the assessed risk of material misstatement. Pickett (2006) argues that for audits to be effective and efficient, much of the audit effort should be focused on areas that are considered to pose the highest audit risk. Additional audit procedures should be linked to individual audit assertions whereas other audit procedures need to be performed as and when needed. Thus, for an audit plan to be put in place, it is necessary for an auditor to come up with a risk profile of the client comprising an understanding of the business operating by the audit client, assess business risk and also perform its preliminary analytical review.

Secondly, although the audit might have been in its final stages, the fact that there had already been a sticking point between the auditors and CMD as to the validity and accounting procedures of the companies write-off’s of accounts receivable, once the audit team was made aware of the pending lawsuit of CMD by one of its clients for the exact same reason, they should have reconsidered their position on the evidence (suspension of judgment) and made sure to review that evidence before issuing an opinion.

During the planning phase of the audit, you met with Pinnacle’s management team and performed other planning activities. You encounter the following situations that you believe may be relevant to the audit:

During the planning phase of the audit, you met with Pinnacle’s management team and performed other planning activities. You encounter the following situations that you believe may be relevant to the audit:

1. Discuss three management events that occurred that should have been a “red flag” to the auditing firm.

This essay explores the corporate collapse of Harris-Scarfe on April 3 2001, which before their collapse was Australia’s third largest retail group (Buchanan 2004, p. 55). It will explore the collapse in the context of the auditing framework. In particular, how the financial indiscretions were not discovered by the auditors, which were going on as early as six years prior to the collapse (Buchanan 2004, p. 62). To start with, we define what the auditing objective is in order to work out where it failed in this case. ASA 200.11/ISA 200.11 defines the auditing objective as one that needs to ascertain reasonable assurance that the financial report as a whole is free from misstatement, whether due to error or fraud. In doing so the auditor can give an opinion of whether the financial report was prepared in accordance with the financial reporting framework (Gay & Simnett 2012, p. 12).

Charles Tollison was an audit manager for over thirteen years at a large international accounting firm. He was a dedicated worker, very knowledgeable about technical accounting and auditing issues. Whenever called upon Tollison never turned down a difficult engagement, and often worked long hour. He even made several personal sacrifices; his most recent was missing his eight year old daughter’s birthday party. While in the midst of completing a tough audit Tollison met his office managing partner. During their meeting Tollison was informed that he had been passed over for a promotion to audit partner for the second consecutive year. He was disappointed about the decision, however, the manager partner Walker Linton, promised Tollison that he would “call in all favors” from other partners within the firm to win him a promotion for the following year. (Knapp, 2015)

Auditors should plan the audit so that the engagement is conducted in an effective manner.