In May 2017,the Firm of Chang and Crown (C&C)became the Auditors

question 63

Essay

In May 2017,the firm of Chang and Crown (C&C)became the auditors of Laua Limited (LL)for the fiscal year ended December 31,2016.LL's shareholders and Board approved the change from its previous audit firm on the recommendation of LL's senior management.One of the new board members is a bit confused about management's role with respect to the financial statements and thought that Chang and Crown would be preparing the financial statements.He was also glad that the auditors would be able to help prevent illegal acts and fraud.
Required: A)Distinguish between management's responsibility and the auditor's responsibility for the financial statements under audit. B)Explain to the board member why the auditor does not help prevent illegal acts and fraud.What is the role of the auditor with respect to illegal acts and fraud?

Understand the concept of tax incidence and how the tax burden is distributed between buyers and sellers.

Evaluate the effects of subsidies and how they differ from price controls.

Comprehend how taxes affect supply and demand curves and market equilibrium.

Understand the economic rationales for taxing specific goods, such as environmental concerns.

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Definitions:

Setting of Wages

The determination of how much compensation employees receive for their labor, influenced by factors such as skill level, industry standards, and economic conditions.

Job Evaluation

A systematic process for determining the value and rank of a job in an organization relative to other jobs.

Wage Survey Data

Information collected on wage rates for various jobs within an industry or region, used to compare and set competitive salaries.

Internal Equity

A pay strategy ensuring fairness in employees' wages within the same organization, based on job value and employee contribution.