PART 1 DBACB ACDAB CDBCA PART 2 一、課本習題24-25 二、課本習題25-25 三、課本習題26-27 四、a.1 1 2 2 1 4 4 5 b.For categories (1) and (2) the auditor has the responsibility for identifying and evaluating subsequent events up to the date of the auditor's report. In discharging this responsibility, the auditor should be alert for subsequent events in performing substantive tests, and also perform specific auditing procedures at or near the completion of field work. For categories (3) and (4), the auditor has no responsibility to make inquiry or to perform any auditing procedures during this time period to discover subsequent events. However, if knowledge of such an event comes to the auditor's attention, he or she should determine whether the event requires adjustment of or disclosure in the financial statements. For category (5), the auditor has no responsibility for their discovery. However, if the auditor becomes aware of such facts and the facts may have affected the report that was issued, the auditor is required to ascertain the reliability of the information. c.1.Inquiry of management; client "rep" letter. 2.Review of bad debt write-offs in January. 3.Reading of minutes. 4.Observation of fire; newspaper account of fire; inquiry of management. 5.Inquiry of management; lawyer's letter; and client "rep" letter. 6.Reading of minutes. 7.Newspaper story on takeover; inquiry of management. 8.Inquiry of management; lawyer's letter; and client 'rep" letter. d.If the client fails to make required disclosure, the auditor should notify each member of the board of directors of such refusal and take the following steps to prevent further reliance on the audit report and: ‧Notify the client that the audit report must no longer be associated with the financial statements. ‧Notify regulatory agencies having jurisdiction over the client that the report should no longer be relied on. Notify (generally via the regulatory agency) each individual known to be relying on the statements that the report should no longer be relied on. 五、1. Write-up work and preparation of financial statements are normally an engagement for an accounting service and not an audit of the financial statements. It is important that the client understand this distinction, and, more important, that there be a clear understanding between the client and the CPA of the nature of each engagement. Verbal commitments, such as a telephone conversation, can often be misunderstood and therefore should be followed up with an engagement letter which spells out the terms, nature, and limitations of the services to be performed. A copy of this letter should be signed by the client to acknowledge the client's agreement, understanding, and approval of the scope of the engagement and returned to the CPA. 2. Even a regular audit engagement cannot be relied upon to disclose defalcations, and in an engagement for unaudited financial statements the CPA has no responsibility to apply any auditing procedures. However, as a professional, the CPA does have a responsibility to exercise due care in carrying out engagements, to apply professional judgment in the preparation of financial statements, and to bring to the client's attention any unusual or suspicious matters noted during the engagement. In a typical situation of principal and agent, a third party may rely on an agent's representations. To avoid misunderstanding in this situation, the CPA should have a clear understanding and written statement from the client (the businessman) that the CPA may rely on information and representations from the independent agent. 3. The word "audit" should be avoided in nonaudit engagements. The CPA should persuade the client to change the account title to 'accounting services," and should be certain the client understands the difference between an accounting service and an engagement to examine the financial statements in accordance with generally accepted auditing standards. 4. Using language in a covering letter such as "which we have reviewed" can imply that an examination of some type was made and the CPA may find that he or she has assumed more responsibility than intended. A short, concise disclaimer of opinion should always accompany unaudited financial statements with which the CPA is associated and each page should be clearly and conspicuously marked as unaudited. If a separate covering letter is used, it should contain no language that would expand upon the simple disclaimer of opinion. 'The recommended disclaimer is as follows: "The accompanying balance sheet of X Company as of December 31, 19XX, and the related statements of income and retained earnings, and cash flows for the year then ended were not audited by us and accordingly we do not express an opinion on them." 5. While the CPA does not have a responsibility to perform any auditing procedures in an unaudited engagement, he or she does have a responsibility to perform all services undertaken in a professional capacity with reasonable skill and care. The fact that the CPA was reviewing invoices only to determine account classification and the missing invoices did not affect the total financial statements does not eliminate his or her responsibility to bring to the client's attention any potential problem areas. The CPA should have advised the client of the missing invoices and suggested that the client follow up on this matter or, if the client so desired, the CPA could pursue it further as an additional accounting service. 6. By definition, unaudited financial statements have not been audited by the CPA and he or she cannot be expected to have an opinion as to whether they are prepared in conformity with GAAP. However, the CPA does have a responsibility to complete the unaudited engagement in a professional manner, and if he or she concludes on the basis of facts known to him or her that the unaudited financial statements are not in conformity with GAAP, the CPA should insist upon appropriate revisions. In this situation the land and building should be adjusted to historical cost less depreciation. If the CPA cannot persuade the client to adjust the land and building, he or she should set forth clearly in the disclaimer of opinion the departure from GAAP and the effect, if known, on the financial statements. Further, if the client refuses to accept the CPA's disclaimer of opinion with the reservations clearly set forth, the CPA should refuse to be associated with the financial statements and formally withdraw from the engagement. 7. The CPA must issue a disclaimer of opinion on the client's unaudited financial statements since, by assisting in their preparation, he or she has become associated with them. Additionally, if the client cannot be persuaded to add the footnote disclosures recommended by the CPA, the disclaimer of opinion should set forth clearly this departure from GAAP. If the statements are only for internal use by the client's the footnote disclosures may not be necessary, but then the CPA must add to the disclaimer a sentence that the financial statements are restricted to internal use by the client and therefore do not necessarily include all disclosures that might be required for a fair presentation in conformity with GAAP. If the client refuses to accept the CPA's disclaimer of opinion with the reservations clearly set forth, the CPA should refuse to be associated with the financial statements and formally withdraw from the engagement. --

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