Tomy Laze

To: Bob N. Weaves & Shirley B. Klueless

Prepared by: Date: October 12, 2015

Reviewed by: Date:

Client Name: Higuard Pharmaceutics

Subject: Tom Lazy

Facts

Tom Laze is a partner of Deloitte & Touché, LLP auditing firm. He has been an engagement partner for the auditing of Higuard Pharmaceutics, which sells its products to three wholesalers that handles the selling down of the products to hospitals, pharmacies and other retailers. Concerns began to afloat after a review was performed on one of Tom Lazy’s audits and although it was recommended for him to be removed from the audit engagements, he was still kept and without being supervised.

Issue(s)

(1) Deloitte & Touché, LLP’s responsibility to assign auditors who are qualified for the audit engagement being assigned.

(2) Lazy’s responsibility to evaluate the reasonableness of Higuard’s estimates of future product returns.

Discussion and Analysis

(1)

According to AU-C Section 220.16 and in order to provide quality control onto each engagement, the auditing firm’s assignment and involvement in selecting the engagement team and any other outside sources (external specialists) should focus and compromised by competent and knowledgeable individuals within the industry that the audit engagement is to be performed in. As per Quality Control Section 10.33, an auditing firm should always assign an individual, known as an engagement partner, within the engagement team as the voice and the person in charge of the communication within management and others with governance authority; as well as the one responsible that everyone within the engagement are following the established policies and procedures.

(2)

According to AU-C Section 540.09, an auditor should always evaluate and review the accounting estimates from financial statements from previous years in order to obtain more reliable and fairly stated estimations when computing and obtaining the...