Golden Bear Case
1)Which “management assertions” were relevant to Paragon’s construction projects? Describe an audit procedure that Arthur Anderson could have employed to corroborate that assertion for each.
Professional auditing standards identify 5 “management assertions” that commonly underlie a set of financial statements. These 5 assertions are: occurrence, completeness, valuation/allocation, rights/obligations, and presentation/disclosure. With respect to the audit of Paragon’s construction project, some of these key assertions were overlooked by auditor Arthur Anderson. The main assertions that Anderson should have focused on for this audit include occurrence, valuation, and disclosure. Occurrence is a relevant …show more content…
3) Sullivan identified the 1997 Golden Bear audit as a “high-risk” engagement. How do an audit engagement team’s responsibilities differ, if at all, on a high-risk engagement compared with a “normal” engagement? During the initial phase of planning of the 1997 Golden Bear audit, Sullivan designated it as a “high risk” engagement. However, the SEC noted that Sullivan had failed to mind any attention to these concerns while planning the actual audit procedures. Due to this “high risk” audit, Sullivan and his team should have been extra cautious during the audit and most definitely should have performed a more aggressive and thorough set of substantive audit procedures. A possible strategy that audit teams can consider on “high-risk”