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Audit: 25 T-F plus an audit program for cash

TRUE OR FALSE
1. The Sarbanes Oxley Act was implemented by Germany in 2002.
2. The evaluation of the internal control environment is the responsibility of management.
3. GAAS refers to General Accounting and Auditing Standards.
4. GAAP refers to Generally Accepted Accounting Practices.
5. Confirmation of customer accounts receivable could be considered an acceptable audit procedure.
6. Materiality should be the same for all audit clients.
7. Management must present to the auditors a calculation of the cost/benefit analysis for internal controls.
8. Developing an audit program is the responsibility of management.
9. Confirmation of accounts payable balances with suppliers is an acceptable audit procedure.
10. Work paper documentation prepared by the auditor is considered the property of the audit firm.
11. The requirements to become a CPA are different in each state even though the exam is uniform.
12. An auditor in a big firm must be registered with the IRS in order to practice.
13. A series of steps on how to audit a specific balance sheet account is commonly referred to as an audit program.
14. A CPA must be a CMA as well in order to practice.
15. A CFA must be a CPA.
16. AICPA refers to American Institution of Certified Public Accountants.
17. The term Big 4 refers to the four largest accounting firms.
18. The Big 4 includes D&T, KPMG, PWC and E&Y.
19. Auditing is the same as accounting.
20. According to auditing standards an auditor of a large company (great than $ 1 billion in Sales) must use statistical sampling.
21. The following are correct steps in auditing cash for a company:
a. Perform interviews with management and
b. Send confirmations to clients to confirm the balances owed.
22. A change in accounting method will always result in a qualified opinion.
23. When auditing leases the auditor should refer to Financial Accounting Standard Number 13
24. Financial statements that are prepared under US GAAP should result in a qualified opinion.
25. Cut-off refers to changing financial information based upon management's criteria.

AUDITING PROGRAM FOR CASH:
Write an audit program for auditing cash. The program must include at least 10 steps.

Solution Preview

F 1. The Sarbanes Oxley Act was implemented by Germany in 2002.
F 2. The evaluation of the internal control environment is the responsibility of management.
T 3. GAAS refers to General Accounting and Auditing Standards.
F 4. GAAP refers to Generally Accepted Accounting Practices.
T 5. Confirmation of customer accounts receivable could be considered an acceptable audit procedure.
F 6. Materiality should be the same for all audit clients.
F 7. Management must present to the auditors a calculation of the cost/benefit analysis for ...

Solution Summary

The 25 true-false questions about basic audit concepts and procedures are answered in the solution. The audit program for cash is an 18 step, comprehensive audit program designed for a complete audit of cash and cash equivalents.

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