You are a public accountant retained by the manager of a cooperative retirement village to do "write-up work." You are expected to prepare unaudited financial statements with each page marked "unaudited" and accompanied by a disclaimer of opinion stating no audit was made.In performing the work,you discover that there are no invoices to support $25 000 of the manager's claimed disbursements.The manager informs you that all the disbursements are proper.What should you do?

Question

Quizplus · Accepted Answer

As a professional accountant, you have ethical responsibility to ensure that financial statements are accurate and include all necessary disclosures. Without documentation for $25 000 of claimed disbursements, it is not possible to determine the accuracy of financial statements. Therefore, the best option would be to obtain further information about the missing invoices and if the situation remains unsatisfactory, withdraw from the engagement. Including the unsupported disbursements in the statements (Option B) would be unethical and could lead to legal liabilities for you as an accountant. Similarly, omitting the unsupported disbursements (Option A) would not provide accurate financial statements. Obtaining a written statement from the manager (Option C) is not sufficient to ensure accuracy and completeness of financial statements.

You Are a Public Accountant Retained by the Manager of a Cooperative