13 Jun YOU HAVE GONE THROUGH ALL NECESSARY PLANNING, SUCH AS THE REQUIREMENTS OF SAS 56 AS WELL AS OTHER PRONOUNCEMENTS. YOU ARE NOW AT THE STAGE OF PREPARING A PLANNING MEMORANDUM.
As the partner in charge of audits at Dewey, Wright, and Moore, you have decided to accept AV Imports and Exports as a new audit client. You have gone through all necessary planning, such as the requirements of SAS 56 as well as other pronouncements. You are now at the stage of preparing a planning memorandum.
You have been working on the audit engagement of the company for the previous year-end, and you are in the final stages of completing the audit. You plan to have all the fieldwork completed and the report signed by May 10 of the current year. You are concerned about some transactions that have occurred just after year-end that may affect the financial statements you are auditing. You are aware that this area is governed by Statement of Financial Accounting Standards (SFAS) 165. You research the details of the standard.
Prior to accepting the audit, you became aware that the company’s financial statements may have been misstated due to the possible occurrence of errors, fraud, or illegal acts that ultimately led to the going concern opinion expressed by the previous auditor Morris & Clark. As auditor, you need to determine your course of action.
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