ACCT 803 Role Play
Storyboard Tekst
- Introduction of client situation
- We will approve of your loan if you sign this debt covenant. The terms include providing quarterly and annual statements as well as an audit opinion
- Seeking auditor's help
- I entered a debt covenant with the bank late last year and need an audit opinion for this financial year
- Sure, for now I would need a copy of the terms of your debt covenant, your financial statements, etc.
- Team meeting
- Assessment procedures for _ grocery store
- The owner of a grocery store has entered a debt covenant with the bank to [insert reason]
- Determining relevant assertions
- I think the client may have understated their debts and overstate equity
- There are no threats to independence so audit company accepts the client and requests the necessary reports
- Creating risk assessments
- Are there any debt covenant violations?
- Team leader introduces client to the audit team. They discuss and allocate the roles of each person and schedule a Zoom team meeting to meet back and report their findings
- Assessing internal controls
- Do you have any internal controls in place? E.g. cameras, lock on cash register, segregation of duties, etc.
- Team member A is analyzing the completeness classification of client's reports and obligations of client. Shechecks for debt mistakes (classifications) and the directional risk for debt (understatement/completeness).
- Team member B inspects client's documents to identify risks and sample debt related reports to ensure there has been no violation to debt covenant. She alsoassesses for debt related fraud.
- Team leader later visits client's business to assess internal controls and identify any control deficiencies.
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