green has been an audit client of lh h for about 10 years it 549169

Green has been an audit client of LH&H for about 10 years. It is a private company in which the owner is very involved on a day-to-day basis. Materiality for the current year has been set at $50,000. Green’s year-end is December 31, and the audit for 2009 is essentially complete. The audit report is currently dated April 15, 2010, the same date that the file was reviewed by Don.

Only three issues have been identified as outstanding. The following is information regarding these issues that was obtained by the staff.

I. A legal letter was received indicating that an outstanding lawsuit against Green that arose in 2009 had been settled on April 10, 2010. Green will have to pay $125,000 plus costs. Following receipt of this letter, the lawsuit was discussed with the owner of Green and he said that they are not going to appeal the judgment. In previous discussions, Don had advised Green’s controller that the loss must be recorded and the liability accrued in the 2009 statements. Both Green’s controller and owner refused to make the adjustment, because they did not have enough time to adjust the financial statements.

2. The file included a note from Don that Green had requested we not send out accounts payable confirmations to two of the company’s major suppliers because of ongoing volume-rebate disputes with these suppliers.

3. Green has set up a receivable of $500,000 related to inventory destroyed and business interruption losses suffered as a result of a warehouse fire that occurred before year-end. No procedures have been performed on this amount.

Attachments:

Don't use plagiarized sources. Get Your Custom Essay on

green has been an audit client of lh h for about 10 years it 549169

For $10/Page 0nly

Order Essay

Don-Lowe-CA-U….pdf