Preview

Surfer Dudes Case Summary

Good Essays
Open Document
Open Document
917 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Surfer Dudes Case Summary
Surfer Dudes Duds Case

During the Surfer Dudes case the going concern assumption and opinion an auditor might issue at the end of an audit are a focal point. It is brought up in relation to the audit of the Surfer dudes company. Whether or not to issue a going concern opinion is a tough decision and can have a serious effect on a company. Taking into account the relationship between the audit partner and CEO in this case the issue becomes even touchier. Going concern is an assumption that a particular company will be financially stable enough to continue and fulfill its obligations in the present and future. When an auditor issues a going concern opinion it is because this assumption is not met. An unqualified opinion is issued when all financial statements are thought to be free of material errors. Technically a company could have financial statements free from material errors and deserving of an unqualified opinion but …show more content…
One of these would be possible litigation from lenders and creditors who relied on their audit opinion. Another might be litigation from Surfer Dudes themselves claiming the audit firm didn’t inform them about their going concern and therefore didn’t allow for them to make necessary changes. Another alternative is that Surfer Dudes might turn the company around and no one will be affected by the absence of a going concern explanatory paragraph. Taking into account everything concerning the Surfer Dudes case Mark should try to come up with a strong argument to convince George issuing a going concern opinion is the right thing to do. He should explain how this would allow George to sit down with the audit firm and discuss plans to turn things around; as well as giving customers, and creditor’s faith that Surfer Dudes is reliable in disclosing important
Continue Reading
View Writing Issues

You May Also Find These Documents Helpful

  • Powerful Essays

    Acct 2610 Spring 2003 Practice
    • 554 Words
    • 3 Pages

    Acct 2610 Spring 2003 Practice

    4. When the auditors give an unqualified opinion, it means the company's financial statements do not conform to generally accepted accounting principles. TRUE FALSE…

    • 554 Words
    • 3 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Micro Enhancement Case Summary
    • 481 Words
    • 2 Pages

    Micro Enhancement Case Summary

    Facts of the Case: Micro Enhancement International (MEI) was a software development company that was on the about to have an IPO. They hired Coopers and Lybrand as the auditor. The IPO for MEI was delayed because Coopers and Lybrand were resisting some of MEI’s recognized revenue and were threating to add a “going concern” to the audit. In the end Coopers and Lybrand allowed MEI to recognize the revenue and took away the “going concern” qualification. By the time the issue was settled MEI had lost the underwriter for the IPO and then went bankrupt shortly after. MEI sued Coopers and Lybrand for multiple things, but then wanted to add a breach of fiduciary duty. MEI’s CEO Staples said that, “he trusted Coopers and that Coopers had agreed to do the audit to do the Audit and to serve as MEI’s business advisor…” The judge denied this request and MEI appealed.…

    • 481 Words
    • 2 Pages
    Satisfactory Essays
    Read More
  • Good Essays

    Arthur Anderson's Response To Karen Paetz Case Study
    • 411 Words
    • 2 Pages

    Arthur Anderson's Response To Karen Paetz Case Study

    According to AS No.10, the engagement team is responsible to bring attention to any disagreements or concerns of relative persons that might have significance to financial statements. In this case, the senior manager revealed about $70 million negative net worth of ALO, and the ALO was losing $2.5 million monthly. This potential risk of lacking sufficient capital to continue operation that pervasively related to management assertions and going concern. To this extend, the engagement team members should have bring enough attention respecting the audit issues, however, Arthur Anderson’s engagement partner and manager reported the…

    • 411 Words
    • 2 Pages
    Good Essays
    Read More
  • Good Essays

    MHA Textile Case
    • 658 Words
    • 3 Pages

    MHA Textile Case

    The MHA Case raises the issues of ethics and independence in the auditing world. MHA is the audit client, but NYH is one of its major subsidiaries. NYH has been forced to cut costs, which has left its accounting department lacking in enough adequately trained personnel. When Susan, NYH’s Accounting Manager asks the auditor for help in closing the books for the second-quarter, the auditor must decide how to proceed. The auditor has two main options: help Susan close the books or decline Susan’s request for help. Both of these options have their advantages and disadvantages.…

    • 658 Words
    • 3 Pages
    Good Essays
    Read More
  • Good Essays

    SGeorgieva week 1
    • 996 Words
    • 3 Pages

    SGeorgieva week 1

    (ASU) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern…

    • 996 Words
    • 3 Pages
    Good Essays
    Read More
  • Better Essays

    Ethics Case 3-3: United Thermostatic Controls Case
    • 932 Words
    • 4 Pages

    Ethics Case 3-3: United Thermostatic Controls Case

    Tony Cupertino faces ethical and legal responsibilities as a CPA and CIA. Tony Cupertino must decide whether he report the concerns to the chief financial officer or the audit committee. As the CIA, Tony must uphold the values set forth in the IIA Code of Ethics. Tony must maintain his objectivity and independence from management. The audit committee is responsible for the oversight of the financial statements. As an internal auditor, Tony can address his concerns directly to the audit committee and the audit committee will resolve differences with management. Although Tony’s boss Walter is the chief financial officer and sits on the board of directors, Tony does have the option of reporting the issue to Walter. As a board member it is Walter’s responsibility to safeguard corporate assets and make decisions in the best interest of the shareholders. The…

    • 932 Words
    • 4 Pages
    Better Essays
    Read More
  • Good Essays

    Billy S Beats Inc
    • 1267 Words
    • 4 Pages

    Billy S Beats Inc

    However, the above procedures taken by auditors were not adequate to determine the appropriateness of the management’s estimates. First, Billy’s was a new client to the audit teams, which meant the engagement team should take some actions to obtain some understandings towards the new client. The engagement team should contact the predecessor auditors to obtain knowledge of Billy’s. If the engagement team failed to gather enough information about the client, the control risk of Billy’s should be automatically set at maximum. In this situation, the engagement team would choose to use substantive tests of details at year-end to test controls. Large sample size would be adopted as well. However, in the case, auditors did not get contact with the predecessor auditors. The only audit evidence the engagement team gathered was the inquiries of…

    • 1267 Words
    • 4 Pages
    Good Essays
    Read More
  • Powerful Essays

    Gleim Study Unit 4 Multiple Choice
    • 1679 Words
    • 11 Pages

    Gleim Study Unit 4 Multiple Choice

    An adverse opinion is expressed based on a difference of opinion between the client and the auditor’s external specialist about the value of certain assets.…

    • 1679 Words
    • 11 Pages
    Powerful Essays
    Read More
  • Good Essays

    Case 3.7 – Foamex International Inc.
    • 545 Words
    • 3 Pages

    Case 3.7 – Foamex International Inc.

    The auditor's responsibility is to communicate significant deficiencies and material weaknesses that exist regardless of management's decisions. These significant and material deficiencies should be communicated to the management in writing. In the case of non-public companies, the auditors are not required to report separately on internal controls by the PCAOB. Thus, the auditors’ responsibility for a non-public company is to focus on fraud within the audit.…

    • 545 Words
    • 3 Pages
    Good Essays
    Read More
  • Powerful Essays

    Crazy Eddie
    • 2254 Words
    • 10 Pages

    Crazy Eddie

    1. Compute key ratios and other financial measures for Crazy Eddie during the period 1984-1987. Identify and briefly explain the red flags in Crazy Eddie’s financial statements that suggested the firm posed a higher-than-normal level of audit risk.…

    • 2254 Words
    • 10 Pages
    Powerful Essays
    Read More
  • Better Essays

    Crazy Eddie Case
    • 1135 Words
    • 5 Pages

    Crazy Eddie Case

    The main critical issue in the Crazy Eddie case is the incompetence and lack of professional skepticism of the company’s audit team and their inability to successfully comply with the standards of GAAS. The auditors failed to exercise the fundamentals of the substantive audit plan which would have uncovered at least some of the fraud. Furthermore, this inability and lack of knowledge on how to properly execute an audit threatened the independence of management and internal auditors as well as the outside auditing firm.…

    • 1135 Words
    • 5 Pages
    Better Essays
    Read More
  • Powerful Essays

    Beach Bum Case Summary
    • 1069 Words
    • 5 Pages

    Beach Bum Case Summary

    Beach Bum’s job advertisement has included some exclusionary words that would keep some applicants from apply to a lifeguard position. The use of “look good in bikini” would be discriminating against males due to the fact females wear bikini and it could result in disparate treatment lawsuit. Also, the use of “look good in bikini” would be discriminating against religion due to the fact some religions does not allow its practicing members to wear such garments. A lawsuit under religious discrimination can show failure to reasonably accommodate the person in this particular religion. Another view of “look good in bikini” could discriminate against some women and men that do not have a particular body type. A fourth view of “look good in bikini” could exclude those that are qualified that are over the age of 40. A fifth problem with the job advertisement is the words “work on tan” this could discriminate against people based on race because not all races work on their tans. A sixth problem with the job posting is “home for the summer” this could be looked upon as the employer is only looking…

    • 1069 Words
    • 5 Pages
    Powerful Essays
    Read More
  • Satisfactory Essays

    Quiz 2
    • 609 Words
    • 3 Pages

    Quiz 2

    (TCO 4) To succeed in an action against the auditor, the client must be able to show that:…

    • 609 Words
    • 3 Pages
    Satisfactory Essays
    Read More
  • Powerful Essays

    Crazy Eddie Case
    • 1471 Words
    • 6 Pages

    Crazy Eddie Case

    1. Compute key ratios and other financial measures for Crazy Eddie during the period 1984-1987. Identify and briefly explain the red flags in Crazy Eddie’s financial statements that suggested the firm possess a higher-than-normal level of audit risk.…

    • 1471 Words
    • 6 Pages
    Powerful Essays
    Read More
  • Better Essays

    Acct 555 Smackey
    • 2369 Words
    • 10 Pages

    Acct 555 Smackey

    This paper analyzes a fictional privately held company, Smackey Dog Foods, Inc. as well as its fictional auditor, Keller CPAs. The analysis is based on a Keller Graduate School of Management scenario and a series of questions developed to address concepts learned throughout the External Auditing course. Concepts include: SEC influence, audit planning, audit stages, internal controls, confirmations, sample size, obtaining evidence, inventory, warehousing cycles, Professional Rules of Conduct, and auditor’s legal liability. Each of these auditing concepts are explained and then applied to the scenario between Smackey Dog Foods, Inc. and Keller CPAs.…

    • 2369 Words
    • 10 Pages
    Better Essays
    Read More