Explore BrainMass


Planning and Performing an Audit

Once a company conducts its internal audits, an outside auditor is often engaged to review and determine, with reasonable assurance, if the company has complied with the relevant standards and appropriate requirements. At the start of every audit, auditors need to begin the engagement planning process as well as properly plan th

Family First Farm: Audit

Each year since 2007, the accounting firm of Goode and Thuro was contracted to prepare audited financial statements for Family First Farm. Each year until the current audit, the CPAs did not find any discrepancies. This year, Arthur Goode discovered quite a few discrepancies in Family First Farm's records. After some investigati

Reviewing Audit Working Papers

You are the audit senior on the audit of Harmony Pty Ltd, a large manufacturing company, for the year ended 30 June 20X7. It is now 25 August, 20X7 and you are reviewing the audit working papers prepared by the audit assistant, Susan Jones, and notice the following matters: (a) Susan attended the stocktake on 30 June and observ

Getaway Pty. Limited - Audit risk and its components

Consider the following independent situations, all of which apply to audits of entities for the year ending 31 December 20X7: (i) Getaway Pty. Limited is a long established firm which has been operating a boutique hotel in the Blue Mountains for over 20 years. During this time, it has adopted a conservative business strategy

Audit Risk/Plan

Use the information below to answer the following questions: A. Audit Assessment Steps: a. What is the initial audit risk? High, medium or low? b. What factors made you decide on this level? B. Audit Plan Assertions a. What would you include in the audit plan, and why? b. Would you plan a test of controls or substant

Budget Inc: Internal Audit

The management of Budget Inc. is conducting an internal audit and preparing the operating budget based on wages and salaries. They are requesting the following: 1. At what point does payroll reach the break- even point with the service calls (Volume)? The accounting department provided you with the following informat

Astor City's Audit Standards

Astor City, a small city that is not required to have independent audit, voluntarily decided to have an audit of its financial records. Currently, the city generates $900,000 in revenues. Of the revenue generated, 10% is from state sources and 2% is from federal sources. Janice Murphy, a CPA who serves on the city council has or

Green & White Corporation Bank Reconciliation

See the attached file. The records of Green & White Corporation show the following bank statement information for October: a. Balance per Bank Statement, October 31, 2012, $62,000 b. The bank account balance in the general ledger (Books) on October 31, 2012, $57,035 c. Service charge indicated on the bank statement as

Four Types of Auditor Opinions

Auditors cannot say that the books have been done 100% correctly because they cannot possibly look over every part of them. They instead give an opinion based on a sampling of the information - if the samples check out then they can give an unqualified opinion - which is the best that you can get. What are some other types of

Sunny Energy Applications Co. : Accepting the Engagement

What are your thoughts on the following case? Sunny Energy Applications Co. sells solar-powered swimming pool heaters. Sunny contracts 100 % of the work to other companies. As Sunny is a new company, its balance sheet has total assets of $78,000 including $24,000 of "stock subscriptions receivable." The largest asset is $42,0

If the bank sells a 3,000 traveler's check ...

If the bank sells a 3,000 traveler's check, which of the following statements is true? a) the bank must report the transaction on a currency transaction on a currency transactions report form b) the bank must obtain identification information from the buyer but need not retain the information if the buyer is a customer

bank panic

Does the fact that your bank keeps only a fraction of your account balance in reserve make you uncomfortable? Why don't people rush to the bank and retrieve their money? How do banks prevent panics from occurring?

Audit standards

Statement of Audit Standard 70 - Service Organization audit is an audit on organizations that provide various service to other businesses which, for different reasons may decided to outsource one or more of their activities. During annual audit of companies that have outsourced part of their activities, the external auditor ne

Calculating the Cash Collected from Customers

Accounts Receivable had a blalance of $5400 the beginning of the month and $2,200 at the end of the month. Credit sales totaled $30,000 during the month. Assuming that all sales were made, how would one calculate the cash collected from customers during the month?

Additional Client Representations Obtained by an Auditor

Which of the following statements might be included among additional written client representations obtained by the auditor? a) Compensating balances and other arrangements involving restrictions on cash balances have been disclosed b) Management acknowledges responsibility for illegal actions committed by employees c)

Audit program outlines

Audit program outlines in detail what an auditor plans to do and the expected required time to accomplish each task. An audit engagement may involve more than one audit program. For example, we can have an audit program for accounts receivable, one for cash, one for inventory, etc. can you describe the benefits of audit program

Audit Programs and Components

What are the typical general components of an audit program? What purpose do these components serve? Which component is most important? Explain why.

Audit Programs

1. Why do auditors have to consider the internal controls of the organization? What are some key elements of internal control? Which are the most important? How will the auditor have to modify the audit program if the internal controls are deemed inadequate to support management assertions? 2. How are the analytical procedure

audit notices

1) What should a taxpayer (T/P) do when he receives the audit notice? 2) Can the T/P avoid meetings with IRS auditor once he hires a representative? 3) What can the T/P do if no agreement can be reach between him and IRS? 4) What are some common examples of the timing strategy?

Audit Procedures and Liability: Kodak

Assume that you are the PricewaterhouseCoopers audit engagement partner and have assessed Kodak as a high-risk client. Explain the modification you would make to the audit engagement procedures to minimize any potential liability of the firm.

9-23 (Detection risk and audit evidence) risk components matrix

9-23 (Detection risk and audit evidence) Shown below are five situations in which the auditor wishes to determine planned acceptable levels of detection risk and the planned levels of evidence needed for specific financial statement assertions. The auditor has used judgment in arriving at the nonquantitative expressions for vari

Definition of the Audit Risk Model!

Answer the following questions to define the audit risk model and its components: 1.Define the audit risk model. 2.What is meant by control risk? What is the effect on the amount of evidence the auditor must gather and evaluate when control risk is decreased from high to low? 3.What is meant by inherent risk? Identify four

Entity and Assessment of Related Risks

Imagine that you're the Senior Auditor on the Peach Blossom Cologne Company audit. The Partner on the engagement comes into your office and tells you she's not satisfied with the memo that Jasper Parsons (the former Senior) wrote on Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement.