Auditing and Assurance Services

Running head: AUDITING AND ASSURANCE SERVICES 1
Auditing and Assurance Services
Student’s Name
Institutional Affiliation

AUDITING AND ASSURANCE SERVICES 2
Introduction
The necessity for the financial statements by organizations to be audited by an external auditor
has been the foundation of confidence in the global financial systems. The advantage of an audit
is that it offers a guarantee that management has highlighted a ‘true and fair' perception of
organizational financial performance and position. An audit bolsters the trust and responsibility
of stewardship between the officials who administer the organization and the stakeholders. Based
on the significance if its role, questions have been raised regarding the auditors, audit, and
stakeholders. Firms prepare the financial statements that conform to the framework of generally
accepted accounting principles (GAAP) pertinent to the nation (Sedki et al., 2018). The fair
presentation of these financial statements is assessed by sovereign auditors utilizing a framework
of generally accepted auditing standards (GAAS) which articulate the requirements and guidance
to perform an audit known as auditing standards.
Reasonable esteem is the sum at which the benefit could be purchased or sold in a present
exchange between agreeable partakers or exchanged to an identical gathering.
Question 1
Overview
Audit’s opinion is a certification that precedes the financial statements grounded on an
audit of the opinion of the accountant on the steps and records utilize to generate the statements
irrespective of whether the material misstatements occur in the financial statements. The audit
reports are demanded by law when a company is considered a public one or in a sector that is
controlled by the Securities and Exchange Commission (SEC). Organizations pursue funding and
search to enhance internal controls. The opinion of the auditor is highlighted in the report. The

AUDITING AND ASSURANCE SERVICES 3
audit report starts with an introductory part that highlighted the obligation of management and
audit company. The next section recognizes the financial statements whereby the opinion of the
auditor is provided. The final section presents the auditor's opinion. Even though it is not
discovered in the entire audit reports, the fourth section might be highlighted as an illumination
about a qualified or adverse opinion. An unqualified opinion is the best form of the audit report
that a company can wish for. Additionally, in unmodified audit opinion, the opinion of the audit
company highlights that the reports are prepared in a manner to guarantee that the entire material
conforms to the liabilities, assets, and financial performance of the organization for the reporting
moments emanating from the accounting laws. There might be a circumstance whereby the
auditor cannot show an unmodified opinion regarding the reliability of financial statements. The
auditor is required to take into account the likelihood of making a change.
a.
In this certain question, issues emanate from writing off allowance for doubtful debts in
an insufficient way. Management expressed no interest in altering the essential adjustments for
delivering on bad debts in financial reports for the equivalent. It is essential to grasp the audit
notion of the circumstance as far as possible. The organization should perform a yearly audit for
reviewing accounts receivable in a thorough assessment. Accounts receivable constitutes the
assets. The auditors require changing the considerable duration for attaining assurance for future
analysis motive (Ingram & Wahab, 2017). An audit bolsters of the company trust and
responsibility of stewardship between the officials who administer the organization and the
stakeholders. Based on the significance if its role, questions have been raised regarding the
auditors, audit, and stakeholders. The management requires performing audit activities for
identifying receivables in general ledger and computing the receivable reports. It aims at

AUDITING AND ASSURANCE SERVICES 4
reconciling items and testing invoices in the receivable reports. It assesses the reconciling items
and testing invoices in receivable reports in the most suitable manner. It parallels the shipping
log and conforms with accounts receivable in assessing cash receipts in an effective manner.
The category for this item is under a qualified opinion. The allowance for doubtful
accounts is a decrease of the cumulative amount of accounts receivables highlighted in the
balance sheet of the corporation and is listed as a decrease promptly below the accounts
receivable. This decrease is categorized as a contra asset account. The allowance for doubtful
debts epitomizes the approximate of the number of accounts receivable that will not be paid by
clients. It does not essentially reflect the real experience, which could vary from anticipations.
When the real experience varies, the management changes the estimation methodology to restore
reserve into real outcomes.
b.
In this certain question, it necessitates explaining issues about the valuation of sales
prices in allowance with sales margin for the similar. The auditors have assessed that the
acknowledgment of revenue causes problems due to consignment sales, refunding, round-trip
sales, and returning the rights. The management that is under scrutiny in misstating revenues in
motivating the investor to impress the executive management and the Board of Directors. The
auditors should resolve the problems by performing analytical procedures, including the financial
ratio analysis. It compares the manners for establishing the criteria in the industry in the most
suitable manner. In the event of the revenue cycle, the auditors should assess the net profit
margin and the level of growth in a year in the most effective manner. It assesses the
organization maximum capacity of sales and facilities of workers for full use of future analysis.