Case Study: Jost Furniture International

1026 Words3 Pages

In this case an audit firm Cardinal & Coyote LLP is confronted with a decision if they should accept n a new audit client Jost Furniture International. Sharon Rules, the managing partner of the audit firm, had been approached by Jerry Jost, the CEO of Jost Furniture, and requested the audit firm to formulate a bid for the 2010-year-end audit. Rules delegated the task to Yancy Corliss, who is a new partner in the firm. Corliss asked Lanny Beaudean to lead his team in this project. Beaudean had recently obtained his CPA license and quickly advanced to audit senior at the firm after only a few years. He grouped Vinnie Gabelli and Jackie Oloff to be on the team responsible for performing risk assessment on this project. The audit firm had …show more content…

The auditors are threatened by the fact that if they give any opinion other than unqualified opinion, they will be dismissed. In the case, two auditors have already been discharged by citing in their report of the going concern problems affecting the firm. This creates a conflict of interest. Beaudean has also caused a stir with the ethical problems. The auditor went ahead to appoint Jackie Oloff who is a wife to the Arizona States University professor of accounting. The wife herself is not a CPA and she therefore does not qualify to act in the capacity of a CPA since she is incompetent. Lack of response from the Miles Frazer is professionally unethical since the auditors need to be communicated any material facts about the company regarding any legal matters or litigation before accepting the audit …show more content…

• Communicate with the outgoing auditors to find the reason of their dismissal and whether the right procedures were followed for the discharge.
• Recruit only professional, qualified and competent auditors and CPAs who will help with the audit work.
• Obtain a letter of representation from the management on their responsibility to warrant that the amounts recorded in the books of account and financial statements are true and fair. Furthermore, any important information required to be disclosed to the audit firm by the CEO must be disclosed such as any legal matters etc.
By doing so, I will examine the past records of financial performance to recognize whether there are any going concern problems and if there were any problems with the going concern, adequate measures have been placed. Any matters that may affect the operations of the firm and the going concern such as legal matters should also be addressed. All loan covenants should also be upheld. Upon the confirmation and adherence to the above factors, I would accept the

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