During Her Studies at Florida Keys University, a Public University

question 37

Essay

During her studies at Florida Keys University, a public university that is part
of Florida's state university system, Amanda took a work-study position in the university's financial reporting and accounting department. She figured it would be a great opportunity to gain some experience because she plans to become an auditor once she graduates. One day, Amanda's supervisor informs her that she will be assisting the "independent auditors" as they audit the university over the next several weeks. As she knows many classmates who have graduated and have begun careers in public auditing firms, she is curious to find out who will perform Florida Keys University's audit. However, when she asks around, she finds that none of her friends' firms are engaged to audit her university.
If there are no public accounting firms engaged on the audit, who is most likely performing the audit of the state agency? Do you think the audit fits the description of an independent audit? Why or why not?

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Definitions:

Present Value

The value today of a future amount of money or sequence of cash payments, calculated using a designated return rate.

Effective Rate

The actual interest rate an individual pays on a loan or earns on an investment, taking into account the effect of compounding.

Compounding

The process in which an asset's earnings, from either capital gains or interest, are reinvested to generate additional earnings over time.

Bank Account

A financial account maintained by a banking institution in which the financial transactions between the bank and a customer are recorded.