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Code of Professional Conduct - Case Study Example
Audit reports are used by financial statement users as evidence to the reliability and validity of balance sheet, income statement and statement of cash flows. The audit reports below indicate both a qualified opinion and the worst which is the adverse opinion(Whittington, 1995)…
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An Audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The company recorded land purchased at $100,000 at appraiser's value of $700,000 in violation of generally accepted accounting principles that such land should be recorded at historical cost of $100,000 only.
In our opinion, except for the violation of the generally accepted accounting principles on proper recording of land, the financial statements referred to above present fairly, in all material aspects, the financial position of Graham Company as of December 31, 20XY, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles.