Gold Bear Golf INC. Essay

1.The professional take stocking standards subscribe a set of five concern assertions. Of the five assertions, three argon very important in regards to the Paragon examine. The descriptions below, audit procedure is explained that would have ensured the audit was completed accurately. a.Occurrence- The management assertion that ensures a particular transaction actually happened. In the case of a construction party such as Paragon, this could be verified by going to a job site and checking to memorize if the job is actually happening. b.Valuation/Allocation- The management assertion that ensures the transactions argon accounted for the correct amount. Changing from percentage-of completion manner to the earned value method resulted in importantly overstated revenues and material misstatements in the financial statements. The audit procedure that should take place in this situation is inspection of the records. Looking back at the records would exhibition the change was not sup ported by the accepted accounting standards. c.Presentation/Disclosure- The management assertion that ensures all changes in spite of appearance a family atomic number 18 stated in the notes of the financials. These changes should be easy to understand and depict a complete picture of the company from the year. The audit procedure that should have taken place during the audit is inquiry. Sullivan and the provide should have questioned the managers on his or her decisions instead of taking their word as to why the changes were made.2.The audit failures the depotorsement were referring to was the fact that Sullivan and his staff relied on the managers word. Sullivan and staff did not perform the accurate assertions to strain the information provided from Paragons managers. The audit partner, Sullivan in this case, is the individual who is in charge of ensuring everyone on the audit is performing his or her job completely and accurately. Sullivan will take the blunt of the respon sibility beca engross he is in conclusion the person who is in charge of overseeing the auditing the audit as a whole, but the audit staff should in addition face consciences from the findings.3.A high risk audit means the chance that of material misstatement and fraudulent activities argon significantly high. Weak controls, changes in management, and changes in accounting methods are several reasons why an auditor would conclude a company is a high risk engagement. The audit partner basis the risk of engagement on his or her observations from the company. When working a highrisk engagement, an auditor will examine a higher percentage of the transactions from throughout the year. Checking more transactions means the auditors are going to produce the most(prenominal) accurate financials possible and ensuring no fraudulent activities are taking place within the company.4.Auditors do have the responsibility of following the AICPA Audit and Accounting Guides for specialized industri es. The AICPPA set guidelines for companies in these industries to follow to ensure the end product is of highest quality. Auditors should make sure the managers are following all of the rules and regulation set forth for that typeface of company, but these guidelines should never override or replace the Statements on Auditing and Standards. The Statement and Auditing Standards is the rule book for how and what is to be performed in an audit. the AICPA should make the Audit and Accounting Guides for specialized industries in accordance with the Statement and Auditing Standards so the companies are operating with the highest quality, in both products and financial standing.5.When making a change in the accounting convention used within a company, there has to be very good reason why the company wants to. When these changed are made, they must be presented retrospectively. Managers must produce the financial statements for the past several years so the public can see the effects it has on the company. On the other hand, the changes in accounting estimates are applied prospectively. Managers use the new method in estimating cost and revenues from that point forward. The changes Paragon made are for accounting estimates. The percentage-in-completion method and the earned value method are accounting estimate methods. Boyd and Curbello will use the new method from that point forward. The problem Paragon ran into is disclosure. The changes were not properly disclosed in the financials. This is a problem because two method result in very different numbers for the company.