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Your PA firm has been auditing Ontario Pulp Company for three years. Two years ago, a letter was ...

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Your PA firm has been auditing Ontario Pulp Company for three years. Two years ago, a letter was ...

Your PA firm has been auditing Ontario Pulp Company for three years. Two years ago, a letter was received from the provincial government informing them that they needed to reduce the level of contaminants that they were releasing into the air and into local waterways. The deadline for this reduction is three months from today. The letter indicates significant fines (several hundred thousand dollars) if the targets are not met. Alternatively, the Company will need to shut down operations until the targets are met.
During your audit planning process management informed you that they have not taken any action, but plan to start construction of the new pollution devices next month.
Required:
Explain the impact the above situation has upon your audit planning process.

Textbook

Auditing: The Art and Science of Assurance Engagements, Canadian Edition

Edition: 12^th

Authors: Arens, Elder, Beasley, Splettstoesser

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Brilliant ツ

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