Solve teh below problem:
Q: a. Why would the inherent and control risks at Kid Castle be of concern to a potential auditor?
b. Review the financial statements and calculate the commonly used ratios from Exhibitfor the years ending 2008 and 2007. Assume that the auditor expected the 2008 financial results to be line with the 2007 financial results. Given to Audit: Identifying and Responding to the Risks of Material Misstatement this expectation, comment on the trends in the financial statements and ratios that would cause the auditor to assess heightened risk.
c. Based on your answers to (a) and (b), for what accounts w you recommend that the auditor plan to conduct more subs rive audit procedures?
d. The 10-K discloses the fact that BSP earned total audit fees in and 2008 of $121,026 and $150,000, iespo-rively. Comment on the motivations of BSP and Waggoner to accept the foreign audits and how those motivations might have affected Waggoner's lack ethics and how those motivations might have affected
Presumably, BSP had to pay the Taiwan and Chinese audit firms a portion of the audit fee, and based on the allegations in the PCAOB enforcement release, BSP did virtually audit work. Comment on your thoughts about the appropria of hiring a foreign audit firm to conduct the majority of audit on an engagement and on ESP's actions (or lack thereof) in this regard.
Use the framework for making quality professional decisions from Chapter to identify those steps in the framework whey( Waggoner went wrong and describe what he should have differently.
Describe the risks that an audit firm faces when it attempts to audit a company in a foreign country.
Attachment:- Contemporaray and historical cases.rar