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Zzz Best Case

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1. The major difference between review and audit are the following: The review does not contemplate obtaining an understanding of internal control structure. The review does not assess control risk, tests of accounting records and responses to inquiries by obtaining corroborating evidence through inspection, observation or any other audit procedure. It can point out significant matters of the financial statements but does not provide assurance of their accuracy. A review service provides a moderate amount of assurance on the financial statements, and less evidence is necessary to support this level of assurance.
Whereas audit provides a high level of assurance.

2. The Limitations of Management assertion of existence:
First ZZZ Best auditor George Greenspan performed audit for 12 months ended April 30, 1986. According the case: He confirmed the existence of ZZZ Best major insurance contracts by contacting Tom Padgett. He not only confirmed their existence but also obtained and reviewed copies of all key documents regarding those jobs. However, Greenspan did not inspect any of the insurance restorations. As I understood from the case, If auditor satisfied that these jobs exist by different sources (existence according the paper documents) he is not required to conduct personal on-site inspection. Or if physical observation is not relevant or too costly auditors obtain the next best evidence available. This is the one of limitations of management assertion of existence
The next auditor of ZZZ Best Larry Grey (Ernst and Whinney) besides getting evidence in paperwork, he conducted on-site inspection of one of the biggest restoration site contracts of ZZZ Best. But Ernst and Whinney didn’t corroborate the evidence of existence from all different sources (most reliable eternal evidence which is independent from the Co.). They didn’t take into account that

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