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ZZZZ Best

ZZZZ Best. Review : Limited assurance that the financial statements have been prepared in conformity with GAAP. A “clean” review report provides negative assurance , that is, that the auditor did not discover any evidence suggesting material misstatements. Evidential Matter: Existence

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ZZZZ Best

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  1. ZZZZ Best Review: Limited assurance that the financial statements have been prepared in conformity with GAAP. A “clean” review report provides negative assurance, that is, that the auditor did not discover any evidence suggesting material misstatements. Evidential Matter: Existence Audit evidence must be both relevant and valid. Enhancing validity: 1) evidence obtained from third party (but confederates of Minkow); 2) client has satisfactory internal control; 3) Auditor acquires evidence directly rather than indirectly

  2. Documents prepared external to the client’s internal control system by an independent third party are generally considered to provide a high-quality of audit evidence. However, externally prepared documents in the possession of the client provide a lower quality of evidence than documents that originate and remain outside a client’s internal control system (restoration contracts were externally prepared but in the possession of ZZZZ Best). Other mgt assertions: Right and obligations Should have checked the constructionpermits of the sites or corresponded with the owners of the buildingsto determine whether the client had a legal contract to provide the restoration services.

  3. 3. Payments received: Client can create what appears to be a normal operating cycle on paper  maintain a skeptical attitude. 4. Predecessor–successor communication: Receive all relevant information to make a client acceptance decision and design an appropriate audit (successor initiated): • Integrity of management • Disagreement with mgt re accounting principles or audit procedures • Communications with clients audit committee • The predecessors understanding as to reasons for the change in auditors

  4. 5. Confidentiality agreement  Information leaks to competitors Did restrict the audit  Scope limitation: If the auditor decides that a client’s confidentiality concerns results in scope limitation, the auditor should inform client management that he/she will be required to issue a disclaimer or qualified opinion. Client management can then decide whether to modify the constraints. 6. Is customary that client executives consult auditors before pre-audit earnings release so that the net income is considered “firm” by both parties.

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