Modern auditing-risk of material misstatement

Assignment Help Auditing

Reference no: EM1351270

Your client, a manufacturer of computer components, has experienced slowing demand for its product. Recently, it cut back from three shifts a day to two shifts a day, and the company has eliminated the backlog of orders that existed in prior years by providing financing to customers. Newspaper reports indicate that competition has taken significant business away from the client because a large investment in R&D has not resulted in improved products. Furthermore, a small handful of your client's customers are experiencing financial difficulties because of slowing demand for your client's products.

a. Consider the implications of the above information for revenues. What assertions, if any, are likely to be misstated? As a result, what accounts are likely to be overstated or understated? Explain your reasoning.

b. Consider the implications of the above information for inventory. What assertions, if any, are likely to be misstated? As a result, what accounts are likely to be overstated or understated? Explain your reasoning.

Reference no: EM1351270

Questions Cloud

How does the marriage affect gdp : Suppose a woman marries her butler. After they are married, her husband continues to wait on her as before, and she continues to support him as before (but as a husband rather than as an employee). how does the marriage affect GDP? how should it a..

What is the average emf induced in coil : In a physics laboratory experiment, a coil with 200 turns enclosing an area of 12.0 cm^2 is rotated from a position where its plane is perpendicular to the earth's magnetic field to one where its plane is parallel to field.

Developmental psychology-approaching the tasks : Before Jane begins her homework, she thinks about the best way to approach all of the tasks before her. Jane is demonstrating:

Client and customer partnerships and alignment - analysis : Client and Customer Partnerships and Alignment - Include a brief review of what techniques were used to identify the alignment, communicate it and bring down barriers to partnering with that client.

Modern auditing-risk of material misstatement : Consider the implications of the above information for revenues. What assertions, if any, are likely to be misstated? As a result, what accounts are likely to be overstated or understated? Explain your reasoning.

Calculate approximate annual rate return in investment : Determine the approximate annual rate return in investment of the following cash discount and also compute the amount of interest income earned by Moiton Corporation during fiscal 2010.

Illustrate the effect of capital formation by comparing : illustrate the effect of capital formation by comparing the production possibilities curves with the present time and one in ten years time, for two different eonomies, one with a high rate of capital formation, and the other with a low rate of ca..

Identified causes of organizational behavior issues : Identified causes of organizational behavior issues in organizations and leaders might prevent and fix organizational behavior issues.

Defense against litigation for deficiency : What are the legal issues involved in this situation? What should the auditor use as a defense in the event that he is sued? What was the CPA's deficiency in conducting the audit of accounts receivable?

User Account

All Pages