Assume that during the audit of the public Chandler Corporation
the following critical matter was identified and summarized for
purposes of inclusion in the audit report. Critique presentation
and details of the matter.
Critical Audit Matter
The critical audit matters communicated below are matters
arising from the current period audit of the financial statements
that were communicated or required to be communicated to the boards
of directors and that (1) relate to any accounts or disclosures
related to the financial statements and (2) involve especially
complex matters. The communication of critical audit matters does
not alter in any way our opinion on the financial statements, taken
as a whole, and we are, by communicating the critical audit matter
below, providing a separate opinion on the critical audit matters
or on the accounts or disclosures to which they relate.
Goodwill
Under generally accepted accounting principles, the company is
required to annually test the amount of goodwill for impairment.
This annual impairment test was significant to our audit because
the balance of $12,000,000 as of December 31, 20X1 is material to
the financial statements. In addition, management's assessment
process is complex and highly judgmental and is based on
assumptions, specifically [assume assumptions are presented], which
are affected by expected future market or economic conditions,
particularly those in India and Nepal. Accordingly, we disclaim an
opinion on the goodwill. The company's disclosures about goodwill
are included in Note 6.