Reference no: EM132671789

Question - Frank has come to you because he is worried about recovering the cost of his share of a law firm partnership. His partner, Jennifer, is exercising the "shotgun" clause in their partnership agreement, and wants to buy him out. Over the last two years, Frank and Jennifer have had numerous battles over the way that Frank handles his accounts receivable. Frank is lenient with his customers, and has converted many of his accounts into long term notes extending two and three years into the future. He is confident that these amounts are collectible, because every one of his clients continues to make small monthly payments. Occasionally, he writes off the interest amounts for some customers, since they seem more amenable to paying the principal balances than the interest.

Frank thinks that Jennifer may have been hiding profits from him and collecting some of her accounts in cash. He wants you to audit the books so that he can figure out what the 'true' profits are and how much Jennifer should pay him for his share of the partnership.

Required -

A) Explain to Frank what you would be able to do during the audit engagement and discuss the appropriateness of an audit engagement to Frank's objectives.

B) List and describe three management assertions that may have been violated. Explain how the assertions could be affected.