This is a very complex auditing problem that requires both a word document and an excel spreadsheet. The excel spreadsheet must have the built in calculations and not just the ending calculations in the box.
1. Planning information for the audit of Keystone Computers & Networks, Inc., appears on pages 240-247. Review each major section of the audit plan and briefly describe the purpose and content of the section. Organize your solution in the following manner:
| Section |
Purpose |
Content |
| Objectives of the engagement |
To describe the services that are to be rendered to the client. |
The objectives are (1) audit of KCN's financial statements for the year ended 12/31/X5, and (2) issuance of a letter on compliance with covenants of the client's letter of credit agreement. |
2. In the overall audit strategy for the audit of Keystone Computers & Networks, Inc., on page 246 there is a section on significant risks. For each of the risks, identify the implications and potential responses.
3. In the overall audit strategy for the audit of Keystone Computers & Networks, Inc., on page 246 there is a section on significant accounting and auditing matters. The second matter described involves capitalizing the costs of developing a software program for sale.
Required:
a. Research this issue and write a brief memorandum for the working papers describing the issue and summarizing the appropriate method of accounting for the development costs.
b. Based on your research, describe the major audit issue that you believe will be involved in auditing the software development costs.
4. A partially completed analytical ratios working paper for Keystone Computers & Networks, Inc., is presented on page 244.
Required:
a. Complete the working paper by computing the financial ratios for 20X5.
b. After completing part (a), review the ratios and identify financial statement accounts that should be investigated because the related ratios are not comparable to prior-year ratios, industry averages, or your knowledge of the company.
c. For each account identified in part (b), list potential reasons for the unexpected account balances and related ratios.
Write a page and a half word document, the longest portion needs to be the memorandum, and a page excel document with the adjusted trial balance and the ratios, with the calculations plugged in please.
Attachment:- keystone-case-.rar