CASE ANALYSIS

IN
ASUPRIN

ABARCA, AB KAYE O.

PICO, ROSE ANNIE T.

QUINTANA, GINA C.

SUMANTING, GARNETH D.

SCHEDULE:

2:00PM-3:00PM(MWF)

2:30PM-4:00PM(TTH)
Case 1- Preliminary Audit Conference

Requirements and Solutions

1.) To what extent should Ms. Amog follow the client’s suggestions regarding the manner in
which the audit is to be conducted?

A meaningful audit plans provide a clear discussion among the client and its audit
committee. The auditor discusses the nature of the engagement and the client’s business and
industry trends at the onset of planning. The degree of suggestion may only be entertained to
the extent wherein it can lead to the right parts of the audit for maximum success. Planning the
audit involves only a general audit strategy and a detailed approach for the expected conduct of
the audit. Where, in procedures to be performed are independent from any influence that may
have a major effect on the course of the audit. Hence, the first and second suggestions maybe
considered for the reason that the auditor should also consider the needs of the client. Also, as
long as the client is willing to pay the additional cost for the added concerns and the client is
cooperative with every inquiry of the procedures it may be plausible for the requestions to be
meet.

2.) Explain why the audit work should not be distributed in the manner suggested by the client’s
audit committee.

The audit work should not be distributed in the manner suggested by the client’s audit
committee because considering the suggestion would mean allowing a high risk of material
misstatement in the auditing result. Considering the suggestion of the client’s audit committee
could lead to a tendency that each of the auditors will only focus on what is assigned to them
and would not bother checking the work of other auditors. It cannot be avoided that there
might be also possibility that some auditors might have malicious intent and might turn a blind-
eye regarding of some Company’s flaws and conduct the audit in a manner that is favourable to
the Company.
Case 2- Comprehensive Audit Planning Case (AICPA)

Requirement: Discuss the necessary preparation and planning for the 2016 audit of the Company. In
your discussion, include the sources you should consult, the type of information you should seek, the
preliminary plans and preparations you should make for the field work, and any actions you should take
relative to the staff assigned to the engagement. Do not write an audit program.

Since this is a recurring engagement and the firm that I am working has been the auditor for
several years now, the necessary preparation and planning for the 2016 audit of the Company should
include the sources of information, the type of information, the preliminary plans and preparations for
the field work and the actions needed to take relative to the staff assigned to the engagement. The
sources of information in preparing the audit are the working papers of previous years that include
permanent files for planning the materiality. This also includes the audit adjustments and difficulties
dealt with throughout the audit, the actual time and audit budget on numerous audit parts and the
matters of on-going audit personnel and loan agreements. Constraints and the engagement letter that
affect the audit of the current year as well as the preceding reports, partners and managerial
memorandums evaluating the vital audit areas is important information for the audit. Amount
valuations of allowance account and loan loss reserves are just as significant. Preliminary plans and
preparations that the auditor should make for the field work is to inform the designated representative
who is to conduct an interview to confirm the organization chart if it is still accurate and confirm the
appointments with the employees in order to conduct an internal control review which includes the
revenue and payroll with documented interview that provide valuable information and insight.
And also, the auditor has to know the changes or new policies of the Company that has been
established assess changes in activities, whether there were significant changes in internal control
systems, if the Company has any new reporting requirements and other changes in activities that may
trigger the accounting and reporting considerations. This may make the process more efficient and can
even detect areas of concern that weren’t previously identified. Throughout the engagement, the
auditor should remain alert through observation and making inquiries as necessary for evidence of
compliance with relevant ethical requirements by the staff. If the assigned staffs have not complied with
relevant ethical requirements, the auditor together with those of authority in the firm shall determine
the appropriate actions to ensure that the audits are carried out in compliance with the policies,
professional standards and quality control. The delegation of tasks should be done with the emphasis of
accountability and responsibility, so as to ensure that the performance is sufficient and the completion
of work is satisfactory. The auditor should also assess proactively the team’s capabilities and
performance during the whole of the audit and take the appropriate actions when necessary. The drafts
of the Financial Statements, schedules, work papers or other items must be available on or before the
first day of audit fieldwork. It is best to ask questions and clarification prior to the start of the fieldwork
to avoid potential delays if there are unclear items. Asking questions to those within the Company to
obtain information necessary to prepare required footnote disclosures. Such discussions could include
significant accounting estimate, pending or threatened litigation, related party transactions,
commitments and contingencies and other topics necessary to prepare required footnote disclosures.