investigate further and gather evidence in order to support the numbers given in the financial statements. This type of review report does not provide enough assurance that is needed in order to have a better understanding made by management. In the case of ZZZZ Best‚ Minkow retained Ernst & Whinney to perform the following year’s audit. However‚ instead of performing an Audit‚ they decided to provide a review of the company’s financial statements for the three-month period ending July 31‚ 1986. They chose
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blown wide open. In this case it was a young female journalist writing a filler piece on Barry Minkow’s success. When tying the story up she decided to make a call to the city just to verify their contractor’s license number‚ which never existed. The ZZZZ Best case is relevant for getting into the field of auditing and forensic accounting work because‚ it is important to conduct due diligence and keep professional skepticism no matter how inept a client may come off. Ask
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Topic: ZZZZ Best Company One of the most elaborate and frauds in the United States corporate history was done by a man named Barry Minkow during the 1980s. At the age of 12 Barry got involved with the carpet cleaning business through his mother. One of the good things for a young person of Barry’s age is that this industry is fairly simple to get into. Therefore it required no prerequisite abilities or permits. However what Barry Minkow did not expect was the high tolerance required in order to
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industry. If he would have performed these routine procedures‚ Gray would have realized that ZZZZ Bests reported insurance restoration revenue was grossly overstated. Furthermore‚ AS No.9.7 states that the auditor should have knowledge of the “company’s internal control over financial reporting obtained during other engagements performed by the auditor.” Larry Gray did obtain any information regarding ZZZZ Bests internal control over financial reporting during other engagements and took a rather
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contracts and the visited selected restoration sites are more reliable than management assertion of occurrence. Management assertions can be purposely misleading and the individuals might go to a great length to defraud the auditors and the public. In the ZZZZ Best Companies case‚ Barry Mirkov asserts that all financial statements are properly presented and when the auditors decide to take further auditing procedures‚ Barry Mirkov creates fraudulent contracts‚ rents real estate spaces for a few hours and
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responses to inquiries by obtaining corroborating evidence through inspection‚ observation or any other audit procedure. It can point out significant matters of the financial statements but does not provide assurance of their accuracy. The issue with ZZZZ Best case is that the auditors review was not sufficient enough to review any misstatements on the financial statements. Ernst & Whinney never questioned the internal control‚ reviewed contractual agreements or made comparison of the previous statements
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ZZZZ Best case case1.9 Q1 There are three different levels of services you could obtain from a certified public accountant. These are referred to as compilation‚ review‚ and audit. There are significant differences between the objectives of an audit of financial statements in accordance with generally accepted auditing standards and the objectives of a review in accordance with statements on standards for accounting and review services. The objective of an audit is to provide a reasonable basis
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Case 1.9: ZZZZ Best Company‚ Inc. 1. A review differs from an audit because a review does not allow the auditor to test or observe internal controls and assess control risk. According to AS 5‚ effective internal control over financial reporting provides reasonable assurance regarding the reliability of financial statements. As a result‚ an auditor cannot provide reasonable assurance regarding the reliability of the financial statements by just completing a review; they must complete a full audit
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Case 1.9 Question 1: Ernst & Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for the three months ended July 31‚ 1986. How does a review differ from an audit‚ particularly in terms of the level of assurance implied by the auditor’s report? Answer: A review report does not assess the control risk of a company‚ which means Ernst & Whinney could have not gotten the proper risk that a material misstatement
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Case Study: ZZZZ Best Company‚ Inc. 1. Ernst & Whinney never issued an audit opinion on financial statements of ZZZZ Best but did issue a review report on the company’s quarterly statements for three months ended July 31‚ 1986. How does a review differ from an audit particularly in terms of the level of assurance implied by auditor’s report? Although a review is similar to an audit‚ it differs from an audit in its limited scope and assurances. The objective of an audit is to provide a reasonable
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