Case Analysis Assignment Help On Audits Metropolitan Power Supply

Get 24×7 US,UK and Australia business assignment help from our expert. Our US, UK and Australian assignment help experts assure you that you will get perfect assignment help services within the deadline. Case Analysis Assignment Help On Audits Metropolitan Power Supply •Discuss the arguments for and against the auditors insisting that MPS begin expensing some portion of the construction costs rather than continuing to accumulate an ever-increasing asset. Indicate the position you would take as the auditor. Answer 1. Arguments for Auditors Insisting As per the case analysis, the arguments for authors insisting that some portion of construction costs are priced: (a)    FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived assets” established the concept that an asset should not be carried at a value greater than its “service potential”. This statement requires that carrying the amount of an asset can be reduced whenever the sum of the expected future cash flows is less than the carrying amount (Becker & Terrano, 2007). (b)    From the case analysis, it is also analyzed that the cost on Eagle Mountain will be more than MPS that can be recovered through different operations. In addition, it is also estimated that some of the total cost must be considered as a loss, not as a productive assets. Apart from this, the assets must be written down to the current value of the expected future cash flows from the plant. Additionally, the computation of the loss is highly subjective, but it must be done to fairly present the asset (Carmichael, Whittington & Graham, 2012). Argument against Auditors Insisting According to the case analysis, the arguments against authors insisting that some portion of construction costs are priced. As a MPS’s auditor (Metropolitan Power Supply), we do not know that what will be the future cash flows from operations. Apart from this, the other argument against is that MPS passes the recoverable cost to its rate payers. Recoverable cost will be considered as sheer speculation until MPS gives up the project (Wealleans, 2005). •Discuss whether the auditors should modify their report because of uncertainty as to whether or not MPS can remain a going concern. Indicate the type of opinion that you would issue (You need not limit yourself to a “going-concern” modification.) Answer 2. Types of Opinions As per the case scenario, the auditors believe that the value of plant must be reduced to the discounted expected future cash flows from the plan in accordance with FASB Statement No. 121.  Apart from this, the employees and the management should estimate and analyze the amount of the cost.  It is because, by estimating the total amount of cost, the utility commission will allocate the company to recover based on their experience in the industry (McGuigan, Moyer & Harris, 2010). Along with this case study analysis assignment help, it is also believed that there is a considerable risk that continuing with the Eagle Mountain project that may ultimately cause MPS to become insolvent. This risk is sufficient for the auditors to modify their report as to MPS’s ability to remain a going concern (Georgiades, 2008).  Although the case does not make it altogether clear, when the company would be likely to become insolvent, there is no indication that it will within a one-year period as indicated in SAS 59 relating to going concern questions.  Thus, the facts do not suggest that auditors should issue a going concern modification merely, because they anticipate problems years down the road (McGuigan, Moyer & Harris, 2010). In addition, as per the clear opinion of the auditors, the client should receive the benefits of the doubt.  It means the potential clients will get different economical benefits from the debts in an effective manner. Apart from this, auditor’s opinion should not be modified with a going concern question. It is because; there is substantial doubt that the client will become insolvent within one year from the date of the balance sheet. To speculate over longer periods of time simply involves too much conjecture to be consistent with the attest function (Carmichael, Whittington & Graham, 2012). Along with this business assignment help experts says that, it should also be noted down that the auditors would not modify their opinion as to MPS’s ability to remain a going concern. It is because; the auditors would include an emphasis of a matter paragraph. This would describe the uncertainty surrounding the ultimate realization of the capitalized construction costs (Becker & Terrano, 2007).  Hence, the auditors would consider an emphasis of a matter paragraph that would describe company’s ability to finance the completion of the Eagle Mountain facility and to recover the capitalized construction costs. References Becker, H., & Terrano, R.J. (2007). Not-for-Profit Reporting 2008. USA: CCH. Carmichael, D. R., Whittington, O. R. & Graham, L. (2012). Accountants’ Handbook, Financial Accounting and General Topics. USA: John Wiley and Sons. Georgiades, G. (2008). GAAS Practice Manual (2009). USA:CCH. McGuigan, J.R., Moyer, R.C. & Harris, F.H.B. (2010). Managerial Economics. USA: Cengage Learning. Wealleans, D. (2005). The Quality Audit for ISO 9001:2000: A Practical Guide. USA: Gower Publishing, Ltd. Get 24×7 US,UK and Australia business case assignment help from our expert. Our US, UK and Australian assignment help experts assure you that you will get perfect assignment help services within the deadline.