Reference no: EM132774632

The audit of KBC Solutions by Carlson and Smith, CPAs, was scheduled to end on February 28, 2019. However, Rick Carlson was uncertain whether it could happen. As the review partner, he had just completed going over the work paper files of the senior auditor in charge of the engagement, Grace Sloan, and had way too many questions to wrap things up by the end of the week. Rick called Grace into his office and asked her about some questionable judgments she had made. He hoped her explanations would be satisfactory and he could move on with completing the audit.

Problem 1: Why did you approve the accounting for new acquisitions of plant and equipment that were not supported by adequate underlying documentation?

Problem 2: Why did you accept the client's determinations of accrued expenses rather than make your own independent judgments?

Problem 3: How can you justify relying on last year's work papers to determine the proper allowance for uncollectibles one year later?