Assignment Task: For each of the situations below, research the applicable standards
Problem 1: AICPA Professional Standards address matters that a successor auditor might discuss with a predecessor auditor in determining whether to accept a potential engagement. Select the most relevant paragraph of the applicable Statement on Auditing Standards that identifies the specific matters that a successor auditor might discuss with the predecessor auditor before accepting the engagement.
Problem 2: Conducting analytical procedures for a donut company, Annie the auditor has found significant differences between some ratios for the company and those of key competitors. She has asked you what her next steps should be in the audit based on these initial findings. Search the authoritative literature to help Annie determine what to do next in the audit for the specific analytical procedure findings.
Problem 3: You and your staff have completed an audit of a nonpublic company for the calendar year ended December 31, 20X1. The unmodified audit report date was March 11, 20X2. On March 26, 20X2, the client issued the financial statements. Your team subsequently became aware of Information regarding material nonexistent sales that were included in the 20X1 financial statements. The team concludes that, if known, this information would have affected the audit report. The audit team believes there are persons currently relying on, or likely to rely on, the financial statements. Is the auditor's responsibility with respect to the nonexistent sales different if the auditor has resigned or been discharged prior to undertaking or completing the investigation than if he were the continuing auditor?
Problem 4: Assume that you are the in-charge auditor for the accounting firm, Woody Hayes & Associates, LLP, on the audit team for Griffin Company, which presents its financial statements on the cash-basis of accounting. Select the most relevant AICPA template for the continuing auditor's unmodified report on cash-basis financial statements from the applicable standards.
Problem 5: Assume that your firm is considering taking on the audit of a large bank. A partner in the office that will primarily be performing the engagement has a mortgage loan at the bank. Identify the specific paragraph from the AICPA code that will indicate any conditions under which this loan would not impair the firm's independence.
Problem 6: The firm Agnes and Abner, CPAs, has been asked to perform a review of historical financial statements for a regional, non-public company that is seeking a bank loan for expansion. Agnes is trying to reasonably ensure that the firm performs all required procedures. Provide the specific paragraph from the standards that describes two categories of professional requirements for this engagement.