You are the Engagement Quality Control Reviewer in the firm Rumyee & Jones (RJ) LLP and you…

Question 1

You are the Engagement Quality Control Reviewer in the firm Rumyee & Jones (RJ) LLP and you are responsible for the independent review of all audits. It is March 1st, 2019, you are at the client premises with the audit team and are reviewing the audit working papers relating to accounts receivable, inventory, payroll and concluding the audit ( contingent liabilities and subsequent events) and draft audited financial statements of Black & White, a private company, for the year-end December 31, 2018, and the recommended auditor’s report (an unqualified opinion) dated February 28, 2019.

Your firm has audited Black & White for several years. The 2018 year-end audit was conducted in the two-month period from mid-December 2018 to mid-February 2019. The audit team consisted of the partner, an audit manager, a senior auditor who has been involved with the audit of Black & White for several years, and a newly hired junior auditor.

The following is some key information from Black & White’s draft audited financial statements for the year-ended 2018:


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