Reference no: EM132880147

Question - Imagine you were auditing Uber in the year that the company went public (2019). When doing the audit you found a misstatement in PPE. The company had recorded all of the drivers' cars as assets. Materiality on the Uber audit was $240M and the error was $500M. To record the PPE the company Dr. PPE and Cr. AP Employees. However, the company didn't plan on paying the employees for the cars. For the 2019 audit, Uber had a $4.5 billion dollar loss before tax stemming from $7.9 billion of revenue. Total PPE on the balance sheet was $1.6 billion and total assets were $24 billion. The company also recorded an impairment loss on their PPE and had $7B of long-term debt.

a. What report would you issue for the 2019 audit if this were the only unadjusted misstatement at the end of the audit? Fully justify your response.

b. What assertion is violated by the PPE misstatement? Explain your choice.

c. What type of evidence do you think the auditor used to determine that the PPE was misstated? In other words, how do you think the auditor uncovered this error? Explain.

d. Based on the information above, what are 2 OFSL risk factors that you would identify for Uber for 2019? Why do these factors impact OFSL and how?

e. What base do you think was used for materiality for the 2019 audit? What are two supporting reasons for your choice of base?