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ADMS 4590 Study Guide - Final Guide: Capital Cost Allowance, Interest Expense, Accounts Receivable

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School
York University
Department
Administrative Studies
Course
ADMS 4590
Professor
N/ A

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Document Summary

Re: audit engagement and other issues of curls and slaps inc (csi) for the year ended. Curls and slaps inc. (csi) is a private company engaged in the business of providing ice hockey and curling activities to professionals and families, as well as other ice-rink related services. A&b has been requested to provide a financial statement audit for the year ended. August 31, 2007, as well as to provide advice on a proposal, tax issues, and other issues within the company. Csi has provided statements for the years ended august 31, 2006 and 2007. Using this information, we have addressed client concerns as well as prepared a planning memo for the engagement. Management is requesting audited financial statements in accordance with aspe for a bank, a primary user. As a key user, the bank is interested in csi"s cash position and compliance with loan covenants. The two founding shareholders of csi are also interested in.

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Related Questions

1–33. Match the following defi nitions (or partial defi nitions) of the various types of services to the
appropriate service. Each service may be used once or not at all.
LO 1-1, 2, 6
Defi nition (or Partial Defi nition) Service
a. An attest engagement in which the CPAs agree to perform
procedures for a specifi ed party and issue a report that is
restricted to use by that party.
b. An engagement designed to express limited assurance
relating to subject matter or an assertion.
c. An engagement in which the CPAs issue an examination,
a review, or an agreed-upon procedures report on subject
matter or an assertion about subject matter that is the
responsibility of another party (e.g., management).
d. An examination designed to provide an opinion that is the
CPA’s highest level of assurance that the fi nancial statements
follow generally accepted accounting principles, or
another acceptable basis of accounting.
e. As required by the Sarbanes-Oxley Act and the Public Company
Accounting Oversight Board, an audit that includes
providing assurance on both the fi nancial statements and
internal control over fi nancial reporting.
f. Professional services that enhance the quality of information,
or its context, for decision makers.
g. An attest engagement designed to provide the highest
level of assurance that CPAs provide on an assertion.


1. Agreed-upon
procedures engagement
2. Assurance services
3. Attest engagement
4. Audit of fi nancial
statements
5. Compliance audit
6. Examination
7. Integrated audit
8. Operational audit
9. Review

Paul company has approached your CPA firm with some questions.Paul's management has spoken with a bank about obtaining a loan toexpand its operations. The bank has informed Paul that the bankwill not make the requested loan unless the company submitsfinancial statements. Further, the interest rate on the loan willdepend on whether Paul's financial statements are compiled,reviewed, or audited by an independent auditor. Paul's managementis not familiar with the differences between these three servicesand wonders why the interest rate charged on the loan would dependon the type of service they obtain from your CPA firm.

Describe for Paul Company the differences between compilation,review, and audit engagements. Be sure to include the level ofassurance provided by each one as part of your explanation.

17-41

Russ Major, CPA, drafted the following report on October 25,2015 at the completion of the engagement to compile the financialstatements of Ajax Company for the year ended September 30, 2015.Ajax is nonpublic organization in which Major's child has amaterial direct financial interest. Ajax decided to omitsubstantially all of the disclosures required by GAAP becasue thefinancial statements will be only for mangement's use. Thestatement of cash flows was also omitted because management doesnot believe it to be a useful financial statement.

Identify the deficiencies contained in Major's report on thecompiled financial statements. Group the deficiencies by paragraphwhen applicable. Do not redraft the report.

To the Board of Drictors of Ajax Company:

I have complied the accompanying financial statements ofAjax Company as of September 30, 2015, and for the year then ended.I planned and performed the compilation to obtain limited assuranceabout whether the financial statements are free of matrialmisstatements.

A compilation is limited to presenting information inthe form of financial statements. It is substantially less in scopethatn an audit in accordance with generally accepted auditingstandards, the objective of which is the expression of an opinionregarding the financial statements taken as a whole. I have notaudited the accompanying financial statements and, accordingly, donot express any opinion on them.

Management has elected to omit substantially all of thedisclosures required by generally accpeted accounting principles.If the omitted disclosures were included in the financialstatements, they might influence the user's conclusions about theCompany's financial position, results of operations, and changes infinancial position.

I am not independent with respect to Ajax Company. Thislack of of independence is due to my child's ownership of amaterial direct financial interest in Ajax Company.

This report is intended solely for the information anduse of the Board of Directors and management of Ajax Company andshould not be used for any other purpose.