Erjohn O.

Papa
BSA3 (45043)

1. I can’t accept the audit because my client is not auditable because of lack
of documents and unprepared financial statements.
2. As an auditor, I can make preliminary assessment of the client’s industry to
determine if I can handle the audit because detailed understanding is not
required before the acceptance of the engagement. In depth understanding is
required during the audit planning.
3. It is not feasible to lessen the substantive procedures with a very weak
internal control system. In case the client limits the necessary procedures and
evidence required in performing my audit, my report could be qualified or
disclaim.
4. Having a weak internal system entails greater control risk thus reducing
substantive procedures would make my audit opinion unreliable for the
intended users especially when material figures became misstated because of
the reduction of substantive procedures. In addition, a test of control will only
be conducted when I want to rely on the system, but a weak internal control
shows that it is not reliable.
5. Since my initial assessment showed a strong internal control system, it is
questionable if I didn’t rely on such system. It would greatly reduced the cost
of audit that could help the client with an ease on the part of the user that the
report is reliable because of reliance on such system.
6. Test of balances will be used in testing the inventory of MMC.
7. I should advice the management to disclose such related party transaction
to its notes to financial system. Not doing so, I should inform the users not to
rely on the the financial statement of the company.
8. The report will contain an unmodified opinion because the management
correct its previous error of departing from GAAP and applies it to the revised
financial statement.
9. I should discuss the matter with the management to do necessary actions
in order for the users not to rely on the Financial Statements issued.
10. Since that is considered as scope limitation, I should not issue an
unmodified report but a disclaimer opinion.