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Complete question 2-9 from the textbook. Your initial post should be approximately 250-500 words and cite at least one reference used in preparing your response. Participate in follow-up discussion by commenting on your classmates’ posts or responding to follow-up questions posted by your instructor.
Question 2-9
2–9. Draft the standard form of audit report commonly issued after a satisfactory audit of a nonpublic
client’s fi nancial statements.
Expert Answer
ANSWER:
Independent Auditors’ Report
To the Board of Directors and Shareholder of ABC Company:
We have audited the accompanying financial statements of ABC Company and its subsidiaries, which comprise the consolidated balance sheets as of December 31, 2015 and 2016, and the related consolidated statements of income (loss), comprehensive income (loss), changes in stockholders’ equity and cash flows for the years then ended , and the related notes to the financial statements.
Management’s Responsibility for the consolidated Financial Statements
Management holds the responsibility for the preparation and fair presentation of these financial statements as according to the accounting principles generally accepted in the United States of America; such as the design, implementation, and maintenance of internal control which is relevant for the preparation, implementation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
We hold the responsibility to express an opinion on these financial statements based on our audits. We conducted our audits as per the guidelines with auditing standards generally accepted in the United States of America. Such standards require to plan and perform the audit to ensure the reasonable assurance about whether the financial statements are free of material misstatement.
The work of audit involves performing procedures to obtain the evidence about the amounts and disclosures in the financial statements. The selected procedures depend on the auditor’s judgment, that consists the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. While making those risk assessments, the auditor considers internal control relevant to the company’s preparation and fair presentation of the financial statements as per the design of audit procedures that are appropriate in the circumstances, however not for the purpose of expressing an opinion on the effectiveness of the company’s internal control. This also includes evaluating the effectiveness and appropriateness of accounting policies applied and the reasonableness of significant accounting estimates made by managers, as well as the overall presentation and evaluation of the financial statements.
We believe that the audit evidence that have been obtained is appropriate and sufficient for providing a basis for our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ABC Company and its subsidiaries as of December 31, 2015 and 2016, and the results of its operations and its cash flows for the years then ended as per the guidelines of the accounting principles generally accepted in the United States of America
