Which restrictive clauses apply under the loan agreement

Reference no: EM133506295

The following are two unrelated statements concerning issues that may arise in the professional practice of a CPA.

Required

State whether you agree or disagree with each statement and justify your answer.

Question a. Your supervisor believes that control self-assessment is appropriate for your organization. "In an organization like ours," she says, "where there is significant enterprise risk and the hierarchical structure is very clearly defined, this practice enables us to obtain immediate results and a steady improvement in the performance of each member of the organization. Also, self-assessment gives greater objectivity to our recommendations and this is why we should rely on it entirely."

Question b. In order to ensure compliance with the restrictive clauses of different loan agreements, the auditor plans to verify the company's working capital ratio and its debt/equity ratio every month. These are the only two ratios to which restrictive clauses apply under the loan agreement, and the auditor believes that the evidence will be sufficient if the ratios are calculated every month.

Reference no: EM133506295

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