Respond to the following questions.
Question Requiring Analysis 16-31
16–31. (data attached)
a.Calculate the gross margin percentage for each of State University’s product lines.
b.Compare State University’s gross margins to industry averages. Indicate any margins that appear out of line, in relation to the industry.
Question Requiring Analysis: 16-35
16–35.On July 27, 20X0, Arthur Ward, CPA, issued an unqualified audit report on the financial statements of Dexter Company for the year ended June 30, 20X0. Two weeks later, Dexter Company mailed annual reports, including the June 30 financial statements and Ward’s audit report, to 150 stockholders and to several creditors of Dexter Company. Dexter Company’s stock is not actively traded on national exchanges or over the counter.
On September 5, the controller of Dexter Company informed Ward that an account payable for consulting services in the amount of $170,000 had inadvertently been omitted from Dexter’s June 30 balance sheet. As a consequence, net income for the year ended June 30 was overstated by $90,500, net of applicable federal and state income taxes. Both Ward and Dexter’s controller agreed that the misstatement was material to Dexter’s financial position at June 30, 20X0, and operating results for the year then ended.
What should Arthur Ward’s course of action be in this matter? Discuss.
Question Requiring Analysis: 17-25
17–25.While performing your audit of Williams Paper Company, you discover evidence that indicates that Williams may not have the ability to continue as a going concern.
a.Discuss types of information that may indicate substantial doubt about a client’s ability to remain a going concern.
b.Explain the auditors’ obligation in such situations.
Objective Question 17-27
17–27.For each of the following brief scenarios(attached data), assume that you are reporting on a client’s financial statements. Reply as to the type(s) of opinion possible for the scenario. In addition:
•Unless stated otherwise, assume the matter involved is material.
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•If the problem does not state that a misstatement (or possible misstatement) is pervasive, assume that it may or may not be pervasive (thus, the appropriate reply may include two possible reports).
•Do not read more into the circumstance than what is presented.
Do not consider an auditor discretionary circumstance for modification of the audit report unless the situation explicitly suggests that the auditors wish to emphasize a particular matter. Report Types may be used once, more than once, or not at all.
Question Requiring Analysis: 19-25
19–25.Occasionally, public accounting firms are engaged to report on specified elements, accounts, and items of financial statements. Discuss types of reports that may be provided for a nonpublic company for specified elements, accounts, and items of financial statements.
Question Requiring Analysis: 19-27
19–27.In connection with a public offering of first-mortgage bonds by Guizzetti Corporation, the bond underwriter has asked Guizzetti’s CPAs to furnish it with a comfort letter giving as much assurance as possible on Guizzetti’s unaudited financial statements for the three months ended March 31. The CPAs had expressed an unqualified opinion on Guizzetti’s financial statements for the year ended December 31, the preceding year; they also performed a review of Guizzetti’s financial statements for the three months ended March 31. Nothing has come to their attention that would indicate that the March 31 statements are not properly presented.
a.Explain what can be stated about the unaudited financial statements in the letter.
b.Discuss other matters that are typically included in comfort letters.
Question Requiring Analysis: 20-25
20–25.The nonpublic company attestation standards provide guidance for three basic types of engagements.
a.Describe these three types of engagements.
b.Describe the types of procedures performed for each of these three types of engagements.
c.Discuss the degree of assurance provided by each type of engagement.
d.Identify when each of the three types of engagements results in reports that are appropriate for general use.
Question Requiring Analysis: 20-28
20–28.In an engagement following the attestation standards the subject matter must be capable of reasonably consistent evaluation against criteria that are suitable and available to the user.
a.Explain why criteria are needed for an attestation engagement.
b.Describe what makes a particular set of criteria suitable for an attestation engagement.
c.Explain how criteria are made available to users of the information.
***Respond with a APA-formatted and citation-style paper.
***I would like to see sources other than additional textbooks that teach the same basic definitional and conceptual context, essentially repeating the same information as our course text. I expect professional and scholarly research, not reciting other academic textbooks.***
Wittington, R., & Pany, K. (2022). Principles of auditing and other assurance services. (22nd ed.). McGraw-Hill.
