Reference no: EM132669774

Question - During the course of the work, BROWN discovered an accrued expense account labeled "professional fees" and learned that the balance in the account represented an accrual for the cost of BROWN'S services. BROWN suggested to CALHOUN's bookkeeper that the account name be changed to "fees for limited audit engagement." BROWN also reviewed several invoices to determine whether accounts were being properly classified. Some of the invoices were missing. BROWN listed the missing invoice numbers in the working papers with a note indicating that there should be a follow-up on the next engagement. BROWN also discovered that the available records included the fixed asset values at estimated current replacement costs. Based on the records available, BROWN prepared a balance sheet and Income Statement . In addition, BROWN drafted a footnotes but decided that any mention of the replacement costs would only mislead the readers. BROWN suggested to CALHOUN that readers of the financial statements would be better informed if they received a separate letter from CLAHOUN explaining the meaning and effect of the estimated replacement costs of the fixed assets. BROWN sent the financial statements and footnotes to CALHOUN with the following note included on each page:

"The accompanying financial statements are submitted to you without complete audit verification."

Question - Identify the inappropriate actions of Brown and what should he have done in order to avoid those actions?