Reference no: EM133041109

Question - Taylor, CPA, has been engaged to audit the financial statements of Palmer Co., a continuing audit client. Taylor is about to perform substantive audit procedures on Palmer's goodwill (excess of cost over the fair value of net assets purchased) that was acquired in prior years' business combinations.

An industry slowdown has occurred recently and purchased operations have not met profit expectations. During the planning process, Taylor determined that there is a high risk that material misstatements in the assertions related to goodwill could occur.

Taylor obtained an understanding of internal control and assessed control risk at the maximum level for the assertions related to goodwill.

Required -

a. Describe the substantive audit procedures Taylor should consider performing in auditing Palmer's goodwill and trademark assets. Do not discuss Palmer's internal control.

b. If Taylor engages a valuation specialist, describe what the auditor's responsibility is if the work of the specialist will be used as audit evidence.