ZZZZ Best Company, Inc: Review Report and Audit Evidence Essay Sample

Ernst & A ; Whinney ne’er issued an audit sentiment on fiscal statements of ZZZZ Best but did publish a review study on the company’s quarterly statements for the three months ended July 31. 1986. How does a reappraisal differ from an audit. peculiarly in footings of the degree of confidence implied by the auditor’s study? Answer:

A review study does non measure the control hazard of a company. which means Ernst & A ; Whinney could hold non gotten the proper hazard that a material misstatement could happen within a relevant averment. The study could hold pointed out jobs in the fiscal statements but it would non give the audit squads confidence of their truth. Ernst & A ; Whinney ne’er investigated ZZZZ Best’s internal control either. if they had done so they may hold caught onto some of the deceitful Acts of the Apostless that were being committed. The chief difference between an audit sentiment and a reappraisal is an audit sentiment provides confidence on the fiscal statements that they are accurate.

Question 2:
SAS No. 106. “Audit Evidence. ” indentifies the chief “management assertions” that underlie a set of fiscal statements. The happening averment was peculiarly critical for ZZZZ Best’s insurance Restoration contracts. ZZZZ Best’s hearers obtained third-party verifications to back up contracts. reviewed available certification. performed analytical processs to measure the rationality of the grosss recorded on the contracts. and visited selected Restoration sites. Remark on the restrictions of the grounds that these processs provide with respect to the direction averment of happening. Answer:

Obtaining third-party verification can be a good manner to construct grounds in an audit. but the grounds is built to the extent of what the third-party knows. In this instance. ZZZZ Best had told 3rd parties one thing but was making a wholly different thing than what.