Section II The Audit Proce&s

324

E,2
The secretary knocked sharply on Clark Dailey's office d Cl k
· · d' f oor. ar was the aud·t1
. charge or an upcoming au It o corporate investments He . . manager
in th h d . b 1 . . was rev1ewmg a report P d
for an audit at a JUSt een comp eted. When the secretary ent d 5h rc-p~rc
nfused and said that several financial executives were wai't' . ere ' /· se ~med a little
·CO r h d' h mg m a con1erence room
the 14th floor
. hdb
1or t e au 1tors w o had scheduled an openin
.. t · -
t h· . on
. ___g con1erence t at morning.
The execunves •11 a kleen wamng
, . ror more than 15 minutes . • The secretary. asked what she
S
hould tell
. B1 Mer ey, tne vice president of finance , who was On· ..•he phone as k'mg wu<:re
L

rhe auditors were.

Clark knew that this_ audi~ of investments was important and that his director, William
J. DeVries, was especially interested in attending the opening conference. The normal
practice had been for aud1tees to respond in writing to the final audit report. Mr. DeVries
wanted to be sure to discuss a new policy with the financial executives. The auditors would
be issuing a follow,up evaluation of the auditees' written responses. He knew this woukl
be a sensitive issue and planned to discuss the need for appropriate responses to audit
findings in order to avoid unfavorable follow-ui; evaluations. Mr. DeVries, however, was
on ,•a(:ation, because Clark l:lad told him that the opening conference was scheduled for
the following week. Clark's calendar also showed the opening conference scheduled for the
next week. ·
Cfark hurriedly pulltd together some preliminary notr.s and audit programs to cake to
the opening conference. He and Janet Knox, the audit supervisor who w:is a:;.;igned· to the
audit, went to the conference room. Needless to say, he was unprepared, appeared more
than a little rnnfused, and was somewhat disheveled. Janet also was. unprepared.
Consequently, the opening conference served little purpose but to make the financial
executives. irritated. They insisted that Clark had called one of their departmental secretaries
to set up the appointment. She had informed each of them the day of his call, and they
all had the same day and time on their calendars. More than 15 minutes of the half,hour
meeting was spent discussing the mix,up- in scheduling. They never discussed the new follow-
up procedures.

Required:
a. Discuss what went wrong with this opening conference.
b. How might the difficulties of this opening conference have been avoided?

E-3 th
The auditors for Middlebrook Company toured the production site of re of ~
company's regional divisions. Several things came to. the auditors' attention as t ey toure
the facility:
1. A "graveyard" for old machinery was spotted ~ehind the pdlant. kH~a~y .weh~~~l wTehr:
.h rusty an stac eu m ,1 t,lr •
growing around the machinery, muc h of whlC was . O
f h'15
auditors knew that a healthy market exi5ted for used machinery t type. .