Lakeside Audit Case

In: Business and Management

Submitted By ckosh794
Words 2603
Pages 11
Audit Lakeside Case
October 13, 2015

1. An engagement letter is an essential aspect in establishing an understanding between the client and the audit firm. This documentation is required in order to identify the objective and scope of the audit, outline the specific responsibilities of management and the audit firm, identify inherent limitation of the audit, ascertain the applicable financial reporting framework, and the expected forms Engagement letters are necessary in settling disputes between auditor and management. When management signs the written engagement letter, they are entered into an executor contract with the auditor. In the engagement letter presented by Abernethy and Chapman, the audit firm clearly outlined the following responsibilities for Lakeside management: 1) The financial Statements 2) Establish and Maintain internal controls over financial reports 3) Identify and ensure compliance with laws and regulations applicable to its activities 4) Make all financial records and related information available to auditors 5) At the end of the engagement, providing a representation letter
Abernethy and Chapman outlined the following responsibilities for the auditor: 1) Audit financial statements for purpose of establishing an opinion on the financial position, results of operations, and cash flows in compliance with GAAP. 2) Obtain reasonable, not absolute, assurance that financial statements are free of material misstatements, in accordance with GAAS. 3) Obtain understanding of internal controls 4) Notify the audit committee of any reportable conditions 5) Prepare federal and state income tax returns for year ending December 31, 2009 6) Notify Lakeside if the estimate of $60,000 is significantly effected

2. The best source of information to determine an expected figure for cost of goods sold will…...

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