The auditor is supposed to make assertions and assurance in addition to the client’s assertion. There is a difference between review and audit of financial information because of the level of assurance. An audit provides a high level of assurance on the financial statements compared to the review of financial statements. In addition, with an audit the auditor is required to provide a high level of evidence to support assurance of the report while the less evidence is required in a review. An audit is quite more comprehensive in scope than the reviews thus providing enough information required by the users of financial statements in making decisions.
The audit is prepared and conducted annually while the review is conducted quarterly or mostly when need be. Ernst & Whinney failure to conduct an audit and opt for a review therefore implied the above differences. It is clear that the review was not comprehensive to provide enough information about ZZZZ Best Company financial statements. It can be argued that Ernst & Whinney did want to get into deeper details of ZZZZ Best Company because of the many complic...
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When an auditor is not independent because of client’s involvement, the audit opinion will in addition be affected. This is because the auditor did not perform the audit as required and hence the opinion he could have given while independent is not the same as when influenced by the client. Professional standards do not provide for requirements regarding pre-audit but post year end press releases. However, it is important for the clients to permit auditors to review the release before posting it in the press.
Beasley, Kevin H. & Roger Hussey. (1997).The Audit Status Of Preliminary Profit
Announcement. Managerial Auditing Journal, Vol. 12 Issue 3.
Knapp, Michael. (2008).Contemporary Auditing: Real Issues and Cases, 7th Ed,
Knechel, Salterio & Ballou (2007). Auditing: Assurance & Risk, 3rd Ed
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