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    Auditing

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    Audit risk model & its components

    Helpful Information: Audit risk model: PDR = AAR/IR*CR PDR = planned detection risk AAR = acceptable audit risk IR = inherent risk CR = control risk Problem: Following are six situations that involve the audit risk model as it is used for planning audit evidence requirements in the audit inventory. Situation

    Audit Processes

    Please describe the relationships between audit risks, the collection of audit evidence, and internal control. Use examples in your discussion.

    Subsequent Events Procedures

    The period between the balance sheet date and the date of the auditor report is called the subsequent period. Audit procedures performed in this period are called the subsequent events review. The significance of the audit report date is that it is the cutoff point for an auditor's responsibility to be informed about events

    Management Responsibilities and Auditors Responsibilities

    See attached for the Report of Management. a. What are the purposes of the two reports and who was responsible for writing each? b. What information does the report of management provide to users of financial statements c. Explain the purpose of the audit committee as described in the fourth paragraph of management's rep

    Audit: appearance or fact of lack of independence

    Marie Janes encounters the following situations in doing the audit of a large auto dealership, Janes is not a partner. Situations as follows: 1. The sales manager tells her that there is a sale (at a substantial discount) on new cars that is limited to long-established customers of the dealership. Because her firm has be

    Accounts Receivable

    A firm has forecasted sales of $4,000 in January, $6,000 in February and $5,500 in March. All sales are on credit. 40% is collected the month of sale and the remainder the following month. How much is collected from accounts receivable in February? A) $5,400 B) $4,000 C) $6,000 D) $3,000

    Balance in accounts receivable at year-end

    ABC Co. has an average collection period of 60 days. Total credit sales for the year were $3,000,000. What is the balance in accounts receivable at year-end? A) $50,000 B) $100,000 C) $500,000 D) $80,000

    Toxic Waste Disposal Audit Risk Assessment

    3.46 Risk Assessment. This question consists of 15 items pertaining to an auditor's risk analysis for a company. Your task is to tell how each item affects overall audit risk?the probability of giving an unqualified audit report on materially misleading financial statements. Bond, CPA, is considering audit risk at the financi

    Cost of Bank Loans: evaluating alternatives

    UFSU Corporation intends to borrow $450,000 to support its short-term financing requirements during the next year. The company is evaluating its financing options at the bank where it maintains its checking account. The financing alternatives offered by the bank include the following: Alternative 1: A discount interest loa

    Partial Strategic Audit - Harley Davidson

    Complete the following sections of a Strategic Audit of Harley-Davidson: 1. Analysis of Strategic Factors 2. Strategic Alternatives and Recommended Strategy 3. Implementation 4. Evaluation and Control Objective: Explain the strategic management process within the global environment. Conduct various environ

    Recording Bad Debts: Aramis Company

    Question: At the end of 2007 Aramis Company has accounts receivable of $800,000 and an allowance for doubtful accounts of $40,000. On January 16, 2008, Aramis Company determined that its receivable from Ramirez Company of $6,000 will not be collected, and management authorized its write-off. Questions: (a) Prepare the jour

    How to write an audit approach

    WRITE AN AUDIT APPROACH FOR THESE TWO PROBLEMS 6.47 Employee Embezzlement via Cash Receipts and Payment of Personal Expenses. This case is designed like the ones in the chapter. They give the problem, the method, the audit trail, and the amount. In this case, you can assume you have received the informant's message. Your a

    Tom, an individual taxpayer, has just been audited by the IRS.

    Tom, an individual taxpayer, has just been audited by the IRS and, as a result, has been assessed a substantial deficiency (which has not yet been paid) in additional income taxes. In preparing his defense, Tom advances the following possibilities: a. Although a resident of Kentucky, Tom plans to sue in a U.S. District Court in

    Tax Treatment, Bad Debt, AGI

    33. Sue loaned her sister Janice $10,000 three years ago. Janice has never made any payments to Sue, and Sue has never tried to collect from Janice. This year, Janice filed for bankruptcy and told Sue that she would not be able to repay any of the $10,000 loan. Determine Sue's tax treatment for the loan for the current year.

    Audit of Long-Term Debt

    Audit of Long-Term Debt The long-term debt working paper (indexed K-1) on attached doc. was prepared by client personnel and audited by AA, an audit assistant, during the calendar year 2006 audit of American Widgets, Inc., a continuing audit client. The engagement supervisor is thoroughly reviewing the working papers. Ove

    Bank

    Select a well-known bank. Select an emerging technology at the company (perhaps something like smart cards, teller-less banks or anything) and prepare a proposal to justify the need for this new technology in the organization. At a minimum, discuss what the technology is and how it works, benefits it will provide, and any potent

    Audit of Stockholders' Equity - Zeitlow Corporation

    A CPA firm is engaged in the examination of the financial statements of Zeitlow Corporation for the year ended December 31, 2006. Zeitlow Corporation?s financial statements and records have never been audited by a CPA. The stockholders? equity section of Zeitlow Corporation?s balance sheet at December 31, 2006, follows: Stoc

    Journalize the transactions

    On January 1, 2006, Bettendorf Company had Accounts Receivable $56,900 and Allowance for Doubtful Accounts $4,700. Bettendorf Company prepares financial statements annually. During the year the following selected transactions occurred. Jan. 5 Sold $6,900 of merchandise to John Yockey Company, terms n/30. Feb. 2 Accepted

    Sammy had the following for last year:

    Sammy had the following for last year: Salary $40,000 Short-term Capital gain $3000 nonbusiness bad debt ($10,000) for the current year: salary $45000 nonbusiness bad debt ($1000) collection of last years bad debt $10,000 Calculate her AGI for the current year

    Acme Strategic Bank Options

    The Acme Company is exploring many strategic options. Whichever global business strategy the Acme Company eventually chooses, the firm inevitably will require the services of a bank to help manage its working capital. Many major multinational banks provide a variety of working capital and multinational cash management services.

    Segregation of auditor duties

    The size of an entity can affect the components of internal control. Segregation of duties is a control activity that is important for adequate control. The following example presents a scenario where the auditor can provide assistance to the entity in establishing proper segregation of duties. TameBird Industries produces meals

    Selecting the Proper Audit Opinion and Report Modification

    16-47 (Selecting the Proper Audit Opinion and Report Modification) Required Audit situations 1 through 8 present various independent factual situations an auditor might encounter in conducting an audit. List A represents the types of opinions the auditor ordinarily would issue, and List B represents the report modifications

    Effective Rate and Bank Loans

    Please help with the following problem. My company needs $300,000 to take a cash discount of 2/10, net 70. A bank will loan the money for 60 days at a total interest cost of $5,500. a. What is the effective rate on the bank loan? b. How much would it cost (as a percentage) I the company did not take the cash discount

    Risk and return: Compare two Bank of Tinytown loans

    The Bank of Tinytown has two $20,000 loans with the following characteristics: Loan A has an expected return of 10% and a standard deviation of returns of 10%. The expected return and standard deviation of returns for loan B are 12% and 20%, respectively. a) If the covariance between loan A and B is 0.015 (1.5%) what are th

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