| Course | ACC-4150 Advanced Audit |
|---|---|
| Module | Module 2 |
| Paper type | Written assignment on completing the audit |
| Length | About 916 words, 6 pages |
| Format | APA 7 student paper |
| School | Thomas Edison State University |
| Program | Bachelor of Science in Business Administration |
| Updated | October 2026 |
Free sample paper for ACC 4150 Module 2
Closing the File at Shore Point Seafood: Subsequent Events, Going Concern and the Final Report
Student Name
Bachelor of Science in Business Administration, Thomas Edison State University
ACC-4150: Advanced Audit
Mentor Name
Month Day, Year
Closing the File at Shore Point Seafood: Subsequent Events, Going Concern and the Final Report
Introduction
Shore Point Seafood Distributors, Inc. supplies fresh and frozen seafood to restaurants and grocers from a cold storage facility in Belford, New Jersey. Its fiscal year ended December 31, 2025, and fieldwork is wrapping up in March 2026. Overall materiality is $250,000, performance materiality $187,500 and the threshold for clearly trivial misstatements $12,500. This assignment documents the completion procedures and the report decision.
Subsequent Events
Two events occurred between year end and the date of the report.
The bankruptcy confirms a condition that existed at the balance sheet date, so it provides evidence about the year-end receivable. The spoilage resulted from an equipment failure in February, so it belongs to 2026 but must be disclosed because users would want to know about it. The auditors identified both through inquiries of management, reading minutes of board meetings and reviewing receipts after year end, the procedures the textbook lists for the subsequent events period (Messier et al., 2017).
| Event | Type | Treatment |
|---|---|---|
| A restaurant group owing $140,000 filed for bankruptcy on February 9 after months of missed payments | Recognized: the customer's financial problems existed at December 31 | Increase the allowance for doubtful accounts at year end |
| A refrigeration failure on February 21 spoiled $95,000 of inventory | Nonrecognized: the condition arose after year end | Disclose in the notes; no adjustment |
Legal Letter
A former driver has sued Shore Point for wrongful termination. The company's attorney responded to the audit inquiry letter that an unfavorable outcome is reasonably possible but not probable and that potential damages range up to $180,000. No accrual is required, but the notes must disclose the claim and the possible loss. The auditors compared the disclosure draft to the attorney's letter and confirmed it was consistent.
Going Concern Evaluation
Shore Point violated the minimum debt service coverage covenant on its $4 million bank term loan at December 31. The bank has not waived the violation, which allows it to demand repayment. Add a 2025 loss and a shrinking cash balance, and the auditors can no longer assume Shore Point will still be operating a year after its statements are ready to release.
The auditors then evaluated management's plans: a signed term sheet for a $1.5 million equity investment from the founding family, a renegotiation of the loan covenants in progress and closure of an unprofitable route. The family investment is documented and the family has the means to fund it, but the bank renegotiation is not complete. The auditors concluded that management's plans do not fully alleviate the substantial doubt. Management must disclose the conditions and its plans in the notes. Carson et al. (2013) review evidence that going concern opinions are both costly to issue wrongly and costly to omit, which is why the standard requires a structured evaluation of plans rather than a general judgment.
Management Representations
Signed on the report date, the representation letter has Shore Point's managers confirm that the statements are management's own, that the auditors saw every ledger and every board minute, that all known subsequent events and claims were disclosed, that the family investment term sheet reflects the parties' intentions and that the effects of uncorrected misstatements are immaterial. Representations do not replace evidence; they confirm management's statements in writing. If management refused to sign, the refusal would be a scope limitation serious enough that the auditors would ordinarily disclaim an opinion or withdraw, and they would reconsider the reliability of every other representation management had made during the audit.
Evaluating Uncorrected Misstatements
Management corrected the allowance for the bankrupt customer but declined to record the four items above. Their total is below overall materiality of $250,000 but close to it, which leaves little room for undetected misstatement. The auditors considered whether any item was qualitatively material, for example because it turned a covenant calculation from compliance to breach, and concluded that none was, since the covenant had already been breached. They also asked management to record the cutoff error, the largest known item, and documented the refusal.
| Misstatement | Effect on pretax income |
|---|---|
| Unrecorded utility invoice for December | ($38,000) |
| Inventory cutoff error at year end | (61,000) |
| Overstated accrued bonus | 24,000 |
| Projected misstatement from receivable confirmations | (135,000) |
| Total uncorrected | ($210,000) |
Communication With the Board
Because Shore Point has no audit committee, the auditors will communicate to the board of directors in writing the significant findings, including the going concern conclusion, the uncorrected misstatements, the cutoff error management declined to record and any difficulties encountered in the audit.
The Auditor's Report
The financial statements, as corrected for the bankrupt customer, are fairly presented, so the opinion is unmodified. Since the doubt about Shore Point's survival has not been resolved, the report adds a separately headed going concern section that points readers to the footnote laying out the covenant breach, the losses and the family's rescue plan. The section does not modify the opinion; it directs users to a matter that is fundamental to understanding the statements. Nelson (2009) describes professional skepticism as a willingness to collect more evidence before accepting management's assertions, and the completion phase, when time pressure is greatest, is where that disposition is tested hardest.
Conclusion
Completing the Shore Point audit required distinguishing between subsequent events that change the numbers and those that only require disclosure, evaluating a legal claim, testing management's going concern plans and judging uncorrected misstatements against materiality. Together these lead to an unmodified opinion with a going concern section.
References
Carson, E., Fargher, N. L., Geiger, M. A., Lennox, C. S., Raghunandan, K., & Willekens, M. (2013). Audit reporting for going-concern uncertainty: A research synthesis. Auditing: A Journal of Practice & Theory, 32(Supplement 1), 353-384. https://doi.org/10.2308/ajpt-50324
Messier, W. F., Glover, S. M., & Prawitt, D. F. (2017). Auditing and assurance services: A systematic approach (10th ed.). McGraw-Hill Education.
Nelson, M. W. (2009). A model and literature review of professional skepticism in auditing. Auditing: A Journal of Practice & Theory, 28(2), 1-34. https://doi.org/10.2308/aud.2009.28.2.1
ACC 4150 Module 2 instructions, in plain terms
Completing the audit is the second module's subject, and its written assignment counts within the half of the ACC-4150 grade that written work carries. Completion topics include the search for unrecorded liabilities, subsequent events, legal letters, going concern evaluation, management representations, final analytical procedures, evaluation of misstatements and communications with those charged with governance, all leading to the form of the auditor's report. Prompts usually give a case with several post-year-end facts and ask what each requires. This sample uses an original composite private company audited under AICPA standards, so the report wording follows those standards rather than PCAOB ones. Keep the course site's instructions open while you draft so the order of your answers follows theirs.
How the ACC 4150 Module 2 example is put together
The paper follows the order in which an engagement team actually closes an audit. A table classifies two subsequent events with the reason for each. The legal letter section ties the attorney's response to the disclosure. The going concern section identifies the conditions, evaluates each of management's plans and reaches a conclusion, with research on the costs of getting it wrong. The representation letter is described by content and date. A schedule totals uncorrected misstatements and compares them with materiality, followed by a qualitative check. The report section explains why the opinion is unmodified and what the going concern section does, closing with a note on skepticism under time pressure. The conclusion restates each decision in one sentence, which makes the paper easy to review.
ACC 4150 Module 2 rubric: what earns full marks
The written work rubric rewards accurate application of auditing standards, thorough analysis and clear, professional writing. On a completion assignment, mentors check that subsequent events are classified correctly, that legal and going concern conclusions follow from the facts, that the representation letter is dated correctly, that misstatements are evaluated quantitatively and qualitatively and that the final report matches the conclusions, including the correct heading for a going concern section under the applicable standards. Explaining why management's plans do or do not alleviate doubt carries weight, and so does linking each procedure to the risk it addresses. Unsupported conclusions and confusion between modification and emphasis lose points. Precise use of terms like reasonable possibility, substantial doubt and safeguards signals mastery.
Common ACC 4150 Module 2 mistakes, and how to avoid them
Students often treat every post-year-end event as an adjustment. The deciding question is whether the problem was already there on December 31; if yes, change the numbers, and if it began afterward, describe it in a note when it is large enough to matter. Another common error is concluding that a going concern section makes the opinion qualified; it does not. Take each of management's rescue plans separately and ask two things: will it really happen, and if it does, will it fix the cash problem? Compare uncorrected misstatements with materiality and also consider qualitative factors such as covenants. Date the representation letter as of the report date. Your mentor's completion case can be written up in this structure, with the first custom paper at no cost. Check every threshold against the period in your case before relying on it.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Thomas Edison State University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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ACC 4150 Module 2 questions, answered
Where can I find a free ACC 4150 Module 2 sample paper?
This page shows the finished completion case: two subsequent events classified, a legal letter, a going concern evaluation, representations, uncorrected misstatements and an unmodified report with a going concern section.
What is the difference between recognized and nonrecognized subsequent events?
Recognized events give evidence about conditions that existed at year end and require adjustment; nonrecognized events arise afterward and require disclosure if material.
Does a going concern section modify the auditor's opinion?
No. It draws attention to substantial doubt disclosed in the notes while the opinion itself remains unmodified, assuming the disclosure is adequate.
When is the management representation letter dated?
As of the date of the auditor's report, so it covers events through the end of fieldwork.
How are uncorrected misstatements evaluated?
Their total is compared with materiality, and each is considered for qualitative factors, such as effects on covenants or trends, that could make a smaller amount material.