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North Face Inc Essay

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Discuss the risks to an audit should the client become aware of the materiality thresholds used on audit engagements by the auditing firm. Auditors cannot insist that their clients accept all proposed audit adjustments even those that have an “immaterial” effect on the given set of financial statements, because most clients would refuse to propose audit adjustments.

1. Discuss the general principles or guidelines that dictate when companies are entitled to record revenue and how the $7.8 million barter transaction and the two consignment sales discussed in the case may have violated these principles.

Revenues and gains are realized when products (goods or services), merchandise, or other assets are exchanged for cash or claims to cash revenues are consi...

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1 1997 1998 7.8 accept accomplish account actual adjust affect aid alter answer appar appropri assess asset audit auditor authorit awar b barter basi becom benefit blunder cannot case cash claim clear client compani conduct conserv consid consign consist cours creat credit critic decis defend defer deloitt demonstr destroy determin dictat discuss distort document earn econom effect element engag entiti entitl environ even evid excess exchang execut explain face fair fieldwork financi firm first gain general given good guidelin hand histori immateri implicit improp inc incent includ inher insist investig januari key literatur loss made main major manag materi may mean merchandis might million modifi must necessarili north object observ opinion overal paper present princip principl product profit proper propos provid qualiti question reach realiz receiv recognit record refer refus regard relev reli reliabl repres represent requir respons revenu revis risk sale satisfi second serv servic set sinc sold standard statement strateg strong subordin substanti supervis support team though threshold thus time top trade transact treatment two typic ultim undercut undermin use valu violat work workpap would write write-down