Question

The annual financial statement audit of National Bank of Oman, a banking corporation, has recently been conducted. Tariq Al Zadjali was the on-sight senior. The job came in at 160% of the budget due to additional audit steps performed that were not part of the originally-planned scope. However significant adjustments were found necessary in order for the financial statements to comply with general accepted accounting principles. A qualified opinion was considered necessary because the client disagreed with several material adjustments and was unwilling to make some of them. Based on a review of the working papers, the additional time was reasonable for the steps performed, which also appeared reasonable based on information encountered in the audit. Because of the difficulties in the audit, the report failed to meet the client’s imposed deadline – the board of directors January 1 meeting. The client has expressed clear dissatisfaction with the failure of Tariq Al Zadjali and his staff to meet their deadline.
Based on above scenario:
1. Identify the reasons, why auditor were not able to accomplish his task in a given time.
2. If, you were Tariq Al Zadjali what you would recommend to the client to satisfy him.

Answer 1

1. Reasons for not being able to accomplish the task on time.

• Deviation from the estalished plan.
• Conflict between client's ideas and that of the auditor.
• An increased budgetary expense would have made it financially problematic to continue the audit smoothly and would have increased the time.
• Violation of Generally accepted accounting principles.

2. My recommendation to the client if I was Tariq Al Zadjali

I would have made sure to inform that the internal check and internal control system be reviewed and the accountants be more careful next time while preparing the accounts so that there is no violation of generally accpted accounting principles.