Anda di halaman 1dari 2

1.

Discuss the apparent departures from generally accepted auditing standard by the Ranch & Bose auditors in their audit of KD. Generally Accepted Auditing Standard (GAAS) is a guideline or priciples that has to be practiced by any personnell or firm that is in auditing field. GAAS establishes the audit standard that should be followed in conducting an audit.GAAS has been developed by two organizations that is AIC A and the the e!isting standard has been incorporated by ublic Company Accounting "versight #oard ( CA"#) which was formed by CA"# then has established it%s own auditing Securities $!change Commision (S$C).

standard for public companies and also has establishes independence rules and &uality control standard for registered C A firms besides conducting a peer review program by which it%s representatives review the &uality controls in effect at registered firms and issues an opinion to firm management. In this particular case' we can see that (ench ) #ose did not really comply with Generally accepted auditing standard. *sing the general standards' (ench and #ose did not comply with ade&uate technical training and proficiency' Independence in mental attitude and due care in the performance of the audit and preparation of the report. (ench and #ose has hired a fresh graduate from +he State *niversity of "hio ta,ing part in the audit engagement team. It is clear that these graduate who has -ust graduating may not have the ade&uate technical training and proficiency. In other words they did not have the competency' s,ills and e!periences re&uired to be the engagement team members. (ench ) #ose also did not investigate the fact that +od .azwes,i is the son a general partner of the audited firm. +his might have revo,ed his indepence as senior auditor and increase the audit ris,. (ench ) #ose also did not comply with due care in the performance of the audit and preparation of the report. /e can see that (ench ) #ose did not obtain enough audit evidence in order to issue an un&ualified opinion #esides that (ench ) #ose also did not comply with the standard of field wor, which will guide the auditor in meeting the e!pectation for a &uality e!amination. +here are three standards in total. +hose standard are to ade&uately plan the audit wor, and supervise asistant in performing audit procedures.(ench ) #ose did not supervise the audit procedures conducted and also did not plan the audit wor, well. /e can see this by loo,ing at how +od .azwes,i fail to report the confirmation of the .0 asset hold by a

bro,erage firm to either 1organ or +erez. +he other standard is to obtain sufficient understanding of internal control to ade&uately plan the audit and determine the nature' timing' and e!tent of tests to be performed. +he last standard is to gather sufficient competent evidential matter through audit procedures including inspection' observation' in&uiries' and confirmation to provide a reasonable basis for an opinion regarding the financial ststements under audit. As we can see' (ench and #ose did not comply with any of this standard. "ther than the previous standard' (ench and #ose also violates +he standard of reporting. +his part is especially important because there are many people such as creditor and investor who rely on the auditor report. +his is because' (ench ) #ose issued *n&ualified opinion on .0 financial statements although they fail to obtain certain audit evidence to support their opinion. +hey should have issued a &ualified or disclaimer opinion. Also' in the case of change in professional aapoinment' before entering into an audit arrangement (ench ) #ose did not communicate with the prior auditor to see, professional clearance with client permission. If .0 does not permit it then (ench ) #ose should decline the appointment. (ench ) #ose also can as, the company the reason for the change of the auditor. If the prior auditor did not respond' (ench and #ose should try to in&uire from third parties or perform bac,ground investigation on the company. In this case the prior auditor were fired because of difference of opinion concerning the application of an accounting principle.