70.2K

Verified Solution

Link Copied!

Your instructor will provide you with a list of events that took place after the end of the fiscal year, but prior to the date of the audit report. Assume each event is independent of the others. For each subsequent event:

$$ Indicate what action you believe you, as the auditor, should take given the

circumstance as described.

$$ Explain why you feel this is the correct action to take. Support your explanation

with reference to the auditing standards as appropriate.

January $17,2023-$ A landowner who operates a farm through which the pipeline runs telephoned ColAlta's president to complain that his cows are ill due to the pipeline, and is threatening to sue ColAlta.

January $14,2023-$ Two of ColAlta's main customers, Crowfoot Energy Ltd$.$ and Canagas Ltd$.$ announced their intention to investigate merging their two companies.

February $5,2023-$ One of the accounts receivable clerks resigned on this date. As he cleaned out his desk, he spoke quite loudly and angrily about how ColAlta used fraudulent financial reporting practices. Another clerk informed you that the clerk who resigned had been very unhappy for some time.

January $21,2023-$ While getting coffee one morning, you overheard two employees discussing their suspicions that ColAlta had a history of exaggerating their net income as reported in the financial statements, so that the senior managers could earn a higher bonus at the end of the year.

Answer & Explanation Solved by verified expert

See Answer