Write a narrative for the planning section of the audit work

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Reference no: EM132397822 , Length: 3

Topic – Assignment

Assume that you have just joined Haskell & White and are assigned to the upcoming 2019 audit of Fennec Pharmaceuticals.

In order to get familiar with the entity, you are requested to read information on the client. At a minimum, your supervisors ask you to read the most current Annual Report on Form 10-K (year ended December 31, 2018, as filed March 15, 2019), Proxy Statement (referenced as the DEF14A, as filed May 16, 2019), the most recent current Quarterly Report on Form 10-Q (QE June 30, 2019, filed August 9, 2019) as well as other periodic (Qs/Ks, etc.) and/or event reports (8-Ks), registration statements, etc. on file as necessary. You may also find it worthwhile to perform a Google, Yahoo, or other search to find information on Fennec.

Based on the information you find in the Company’s filings with the SEC, and/or any other resource you deem appropriate (such as industry information, news reports, company website, etc.) write a narrative for the planning section of the audit working papers for the 2019 year-end audit file that discusses the following:

COMPANY RISKS

Enterprise Risk / Business Risk– those risks that affect the Company’s operations and overall organizational activities. In preparing this section, you are primarily to focus on the nature of the Company’s business and the related environmental factors which affect it, and your perceptions of the inherent risk factors involved.

Information Risk – those risks of disseminating misstated information to users of the financial statements. In preparing this section, consider who the potential users are of Fennec’s financial statements (known, foreseen, and foreseeable users – See Textbook Chapter 4) and those areas that may be (more) susceptible to risks in reporting. What areas might require special attention during our audit so that we minimize our Audit risk.

AUDITOR CONCERNS

Engagement Risk – those concerns that we, the auditors should consider as we review our client retention decision for the 2019 fiscal year-end audit. (Note that we became the auditors of record for the quarter that ended June 30, 2017; and thus, this will be our third annual audit for the Company.) Have there been any changes in the environment since our last audit? What factors should we at Haskell & White consider in making our retention decision to continue on with the 2019 audit? After all, we need to manage our own Business Risk once we have agreed to continue with the audit of Fennec.

Materiality – the magnitude of a misstatement or omission that could affect the user of the Company’s financial statements and related data. Without trying to calculate any “value” for materiality, discuss your observations about the Company that may affect your views on the “qualitative aspects” that should be considered for the level of materiality to be used for purposes of conducting the audit. Consider those balances/transaction cycles you consider to be significant as well as trends, ratios, or other information that would have a bearing on your determination of materiality for purposes of the audit.

Audit Risk – the risk that we could issue an unqualified/unmodified audit opinion on financial statements which include a material misstatement. Giving consideration to materiality (above), what are the specific areas on which we should focus to reduce our audit risk to an acceptably low level?

In the format of a file memorandum, 3 pages, analyses of the specific conditions of Fennec and your knowledge of auditing. Write a narrative for the planning section of the audit working papers that including company risks and auditor concerns.

Attachment:- Fennec Pharmaceuticals.rar

Reference no: EM132397822

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