Assignment:
For each of the following independent situations involving non-public companies, assume that you are the audit partner on the engagement. Identify the appropriate type of audit report that should be issued and why. Give the professional standard citation. Assume that all companies are private companies and that each item is material unless indicated otherwise. Some of the relevant professional standards: (AU-C 700-708, 570, 600).
1. Buff Bio is engaged in a hazardous trade and has obtained insurance coverage related to the hazard. Although the likelihood is remote, a material portion of the company's assets could be destroyed by a serious accident.
2. Bakers-R-Us.com is an Internet based start-up company created to sell baking products online. Although the company had a promising start, a downturn in e-commerce demand for baking goods has negatively affected the company. The company's cash and sales positions have deteriorated significantly, and after considering identified conditions or events and management's plans, you have substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. The financial statements provide adequate disclosure about the entity's questionable ability to continue as a going concern.
3. In auditing the long-term investments account of Buff Business, you are unable to obtain audited financial statements for an investee located in a foreign country. You conclude that sufficient appropriate evidence regarding this investment cannot be obtained.
4. Buffalo Oil Corporation, a wholly owned subsidiary of Aggie, Inc., is audited by another CPA firm. As the auditor of Aggie, Inc., you have assured yourself of the other CPA firm's independence and professional reputation and you are willing to take complete responsibility for its audit work.
5. Buffalo Company owns substantial properties that have appreciated significantly in value since the date of purchase. The properties were appraised and are reported in the balance sheet at the appraised values with full disclosure. You believe that the appraised values reported in the balance sheet reasonably estimate the assets' current values.
These are non public companies, therefore, professional Auditing standards for non public companies should be used to answer them ( US Auditing Standards- AICPA) for each question the answer should be refereed to Auditing standard .