the runershop - 2272 Words

Case 11.1 Instructional Notes The Runners Shop: Litigation Support Review of Audit Documentation for Notes Payable Mark S. Beasley, Frank A. Buckless, Steven M. Glover, Douglas F. Prawitt ï€   INSTRUCTIONAL OBJECTIVES To provide hands-on experience with evaluating audit documentation. To illustrate the auditor’s objectives and purposes when documenting the audit work performed. To highlight the care required by auditors when documenting audit work. To illustrate the linkage of management assertions to audit evidence in the context of auditing Notes Payable. KEY FACTS The Runners Shop (TRS) was a family owned business founded seventeen years ago. TRS sold athletic footwear and related products for runners. TRS†¦show more content†¦The cooperative learning activity of Homework Review can be used for the â€Å"out-of-class† assignment. Students meet in small groups to compare and discuss deficiencies they identified by schedule. After students have had a few minutes to compare and discuss their answers the instructor can randomly call on individual students to identify deficiencies they noted. PROFESSIONAL STANDARDS Relevant professional standards for this assignment are AU Section 230 â€Å"Due Care in the Performance of Work,† AU Section 326 â€Å"Evidential Matter,† AU Section 330 â€Å"The Confirmation Process,† and AU Section 339 â€Å"Audit Documentation.† SUGGESTED SOLUTION 1. Describe the purposes of audit documentation and explain why each purpose is important. Properly prepared audit documentation should provide 1) a basis for planning the audit, 2) a record of evidence collected and results of tests performed on the evidence, 3) a basis for determining the appropriate audit report and 4) a basis for review by supervisors of the work performed. Achievement of these four purposes aids the auditor in providing reasonable assurance that the audit was conducted in accordance with the auditing standards. 2. Review Green and Brown, LLP’s audit documentation guidelines and explain why an audit firm would want to include each of the listed items in its audit documentation. The guidelines provided provide the following benefits: Title - Having a proper title helps