Gold Bear Golf INC. Essay Example for Free

Gold Bear Golf INC. Essay1.The professional inspecting standards have a set of five management effronterys. Of the five assertions, three atomic number 18 very important in regards to the god canvas. The descriptions below, inspect procedure is explained that would have ensured the audit was completed accurately. a.Occurrence- The management assertion that ensures a particular exploit actually happened. In the case of a construction company such as Paragon, this could be support by going to a job site and checking to see if the job is actually happening. b.Valuation/Allocation- The management assertion that ensures the transactions are accounted for the correct amount. Changing from percentage-of completion method to the earned rate method resolvented in significantly over give tongue to revenues and material misstatements in the pecuniary statements. The audit procedure that should take place in this situation is inspection of the records. Looking back at the recor ds would show the change was not supported by the accepted news report standards. c.Presentation/Disclosure- The management assertion that ensures all changes within a company are 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 staff should have questioned the motorcoachs on his or her decisions kinda of taking their word as to why the changes were made.2.The audit failures the SEC 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 test 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 wholly and accurately. Sullivan will take the blunt of the responsibility b ecause he is ultimately the person who is in charge of overseeing the auditing the audit as a whole, but the audit staff should also face consciences from the findings.3.A elevated seek audit means the chance that of material misstatement and deceitful activities are significantly higher. 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 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 invoice Guides for specialized industries. The AICPPA set guidelines for co mpanies 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 type 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 explanation 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 principle used within a company, in that location 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 personal 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 difficulty 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.