Quiz 6 This is your final quiz. Please type responses on 1 page, print, and brin
ID: 2590177 • Letter: Q
Question
Quiz 6 This is your final quiz. Please type responses on 1 page, print, and bring with you to your final exam. If you are happy with your other 5 quiz grades, you do not need to complete this quiz. 1 , which one of the following DOES NOT represent a situation where an auditor should disclose confidential client information? a. To comply with a court subpoena b. To comply with an audit partner's wishes c. To comply with a PCAOB review d. To comply with GAAS requirements 2. What is the appropriate accounting treatment for the following situation? If an adjustment is necessary, write out the entire journal entry (include the debit and credit accounts, along with a dollar amount for each). Your response should indicate the appropriate accounting treatment for EACH claim. Yogesh the Auditor sent an attorney letter to Galen Attomeys, LLC related to the audit of Mullis Corporation's 12/31/2015 financial statements. Galen Attorneys, LLC responded to Yogesh as follows: "Yogesh, we have reviewed our records for all actual, pending, or threatened litigation against Mullis Corporation, and have identified two such pieces of litigation, as follows: (1) There is an ongoing class action lawsuit against Mullis Corporation regarding product liability for Mullis Corporation's self-driving bicycles. Apparently the CTO loves eating Chick-Fil-A and somehow that fact found it's way into the code for the self-driving bicycles. Anytime a cyclist rides within 200 feet of a Chick-Fil-A, the bicicyle overrides any pre-input destination and instead makes a direct route to the Chick-Fil-A. There have been hundreds of accidents because of this. In our opinion, there is a probable loss of approximately S1.2 million dollars related to this case. (2) There is threatened litigation from a former employee, alleging wrongful termination. The former employee fell asleep during meetings multiple times and was thus fired. However, the former employee alleges it is actually Mullis Corporations's CEO's fault that he fell asleep, because he was having to stay up late the night before meetings, cramming to prepare for the meetings. As he was taken out of the building by security after being fired, he was heard screaming IT AINT MY FAULT! IT AINT MY FAULT! MULLIS'S EXPECTATIONS ARE OUTRAGEOUS!!!!" In our estimation, it is unlikely that Mullis Corporation will incur any loss related to this claim, as it was, in fact, NOT Mullis Corporation's fault that the employee persistently fell asleep. He is an adult after all. 3. In reviewing the audit of Mullis Corporation, Yogesh the Auditor determined that there were material uncorrected misstatements (i.e., management would not agree to make Yogesh's proposed adjustments) that represented GAAP violations. The amount of misstatements = $6.8 million. Planning Materiality is $5 million. Based on this fact alone, what type of audit report should Yogesh provide related to the audit of Mullis Corporation?Explanation / Answer
1.
To comply with an audit partner's wishes, an auditor should not be disclosed the confidential client information. Option B is correct.
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