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QUESTION

The CPA firm of May Marty has audited the consolidated financial statements of BGI Corporation.

The CPA firm of May & Marty has audited the consolidated financial statements of BGI Corporation. May & Marty examined the parent company and all subsidiaries except for BGI-Western Corporation, which was audited by the CPA firm of Dey & Dee. BGI-Western constituted approximately 10 percent of the consolidated assets and 6 percent of the consolidated revenue. Dey & Dee issued an unqualified opinion on the financial statements of BGI-Western. May & Marty will be issuing an unqualified opinion on the consolidated financial statements of BGI. Requireda. What procedures should May & Marty consider performing with respect to Dey & Dee’s examination of BGI-Western’s financial statements that will be appropriate whether or not reference is to be made to the other auditors?b. Describe the various circumstances under which May & Marty could take responsibility for the work of Dey & Dee and make no reference to Dey & Dee’s examination of BGI-Western in its own report on the consolidated financial statements of BGI.

AnswerRequireda. What procedures should May & Marty consider performing with respect to Dey& Dee’s examination of BGI-Western’s financial statements that will beappropriate whether...
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