Harold White Audit Review Discussion Questions 11/12/13

1. Publicly held companies have stricter audit standards than private companies, which usually include more audits throughout the year. These include large audit scopes, a test of the company's internal controls, review of management signatures on accounting documents and approval statements, or the owners, directors or executive managers on financial statements. They also have to be in accordance with ASB. Private companies will often have the same audit standards as public standards, although audits may be less frequent. Additionally, private companies may not undergo strict audits if the company is closely held by a few individuals. These individuals will often have greater access to financial information, unlike shareholders. Unlike public companies, private companies will be in accordance with PCAOB and/or generally accepted audit standards. In some cases. I believe that private companies dont require an audit. 2. Factors that suggest a greater risk of misstatement in 2012 than 2011 could include the new internet sales system/computer system and reassigned work responsibilities. Although they were new solutions to a previous year problem, they dont know how well things will work for a period of time. Also, the fact they are utilizing an extensive advertising campaign could produce misstatement. 3. Fieldwork was substantially completed on February 25, 2013. I was assigned responsibility for the audit in March 2013. The former senior left the firm on January 10, 2013 to join a competing firm. The three dates implicate that the former senior left even before the substantial fieldwork was completed. Things could be missing from the audit because of the senior leaving before the task was completed. And the fact that the senior moved to a competing firm may imply that the senior is trying to sabotage this firm. Also, detection risk could be higher since all the details are not known about the audit due to the fact that the audit was being performed by someone else. 4. National Bank is a key user of the financial statements because they use these to cap the maximum amount borrowed under credit. They utilize the accounts receivable and inventory balances to come up with decisions. I would say they are included because they deal with sales. 5. The assertions of occurrence/existence usually pose the greatest risk. They deal with whether all assets and liabilities exist at balance sheet date and whether all revenues and expenses actually occurred during the period. Testing needed to test these assertions could include confirming accounts receivables, reviewing bank reconciliations, or cutoff testing. T&B emphasized test of sales transactions and confirmation testing for accounts receivable. I think that these tests fit the audit. Theyre trying to make sure that things actually occurred in that certain period so these two methods would definitely be helpful. 6. The understatement of the allowance for doubtful accounts is less than planning materiality, so the understatement is not material. Also, Ramms clients seem to have good reputations so they will be able to collect a good portion of revenue. 7. The auditor must confer with the client and the client is given the opportunity to correct some or all of the identified misstatements should they wish to do so. Also, I think that the T&B senior

not documenting all the details should be looked into. Lastly, I think that transaction discussed with Mary Maxall about Balco should be examined further.