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Joan is the owner of a small manufacturing company. In prior years, your firm has conducted a review engagement of the company. However, this year, Joan obtained a loan from the federal business development bank and is required to have an audit of her financial statements. When you started asking about controls and procedures at the company, Joan got pretty upset.
You calmed her down a bit and reminded her about the general discussion that occurred with the engagement letter. You have invited her for coffee to briefly explain the following items:
Question 1: Why auditors are concerned about internal controls.
Question 2: Why auditors are required to be concerned about internal controls.
Question 3: What you need to do to understand internal controls.
Question 4: What you will do once you have documented your understanding of internal controls.
Financial Statement Analysis and Preparation
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T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .
Computation of Free Cash Flow
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