Please help me with my homework! It is fairly easy, I just do not want to mess u
ID: 2798410 • Letter: P
Question
Please help me with my homework! It is fairly easy, I just do not want to mess up.
Thank you
MATCHING PROBLEM. For each of the following situations, determine the type(s) of appropriate opinion(s) by placing the appropriate letter in the column. More than one opinion may be appropriate. Unless stated otherwise, assume each amount discussed is, at a minimum, material. S - Unmodified- standard U Unmodified - emphasis of a matter paragraph Q Qualified D Disclaimer A Adverse Situation Opinion Type(s) 1. A company in its first year of existence values its inventory at current replacement cost. While you believe that the inventory costs do approximate replacement costs, these costs do not approximate any GAAP inventory valuation method. The difference involved is material, but not pervasively material to the financial statements 2. Due to recurring operating losses and working capital deficiencies, you have substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. The notes to the financial statements adequately disclose the substantial doubt situation 3. You have discovered that a client made illegal payoffs to a candidate for president of the United States. You are unable to determine the amounts associated with the payoffs because of the client's inadequate record retention policies. The client has added a note to the financial statements to describe this all, and has stated that the amounts of the payments are not determinable In auditing the long-term investments account of a new client, you find that a S2,000,000 contingent liability exists that is material to the consolidated company. It is a probable this contingent liability will be resolved with a material loss in the future. Although no adjusting entry has been made, the client has provided a note to the financial statements that describes the matter in detail and includes the S2 million estimate in that noteExplanation / Answer
1 Qualified as the matter is material but not pervasive 2 Unmodified + EOM So as to take the matter to the attention of users of financial statements 3 Disclaimer At the amount involved is significant and we are unable to perform any procedures on it 4 Adverse As the amount involved is significant and also the company should make appropriate provisions for material forseeable losses mere disclosure is not appropriate 5 Unmodified + EOM Include a EOM para to state that the last year financial statements are not audited by us 6 Qualified It is a change in accounting policy, any such change should be properly disclosed(It is material but not pervasive) 7 Qualified It is a change in accounting policy, any such change should be properly disclosed(It is material but not pervasive) 8 Unmodified + EOM Include a EOM para to state that the financial statements of so and so component is not audited by us but by xys auditor and we are jointly liable for this 9 Qualified as the matter is material but not pervasive 10 Disclaimer Material + pervasive Please provide feedback…. Thanks in advance…. :-)