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External Auditing

Auditing - Western Trading Company

Western Trading Company is a sole proprietorship engaged in the grain brokerage business. On December 31, 2006, the entire grain inventory of the company was stored in outside bonded warehouses. The company's procedure of pricing inventories in these warehouses includes comparing the actual cost of each commodity in inventory wi

Positive and negative external confirmation requests

A) Explain what are positive and negative external confirmation requests? (b) You are assigned to audit the trade receivable balance of a trading company. The company accountant has provided you the trade receivable balance report as at 31st March 2002. What information from this report would you require to prepare positive c

Auditing the sales and collection cycle

Please help me so I can complete the following: You are auditing the sales and collection cycle for the United Regional Hospital, a small not-for-profit hospital. The hospital has a reputation for excellent medical services and weak record keeping. The medical people have a tradition of doing all aspects of their job correctl

Purchase Commitments and Unrecorded Liabilities

How can a purchasing manager use his/her position to defraud the company? What can be done to prevent it? Where could an auditor look to find evidence of losses on purchase commitments and unrecorded liabilities to vendors?

Audit Sampling Applied to Tests of Controls

7. Warren Boyd, a beginning staff auditor, believes that audit sampling applies not only to tests of controls but may be used with all auditing procedures relating to tests of controls. Is he correct? Explain 9. Explain a situation where the concepts of audit sampling do not apply to tests of controls 10. Explain several

Auditing - Assessing control risk

An auditor is required to obtain a sufficient understanding of each of the components of an entity's system of internal control to plan the audit of the entity's financial statements and to assess control risk for the assertions embodied in the account balance, transaction class, and disclosure components of the financial statem

Auditing Woes

I need to work on a position Paper regarding auditing woes. I know that the private sector has had several high profile incidents of poor or illicit auditing. Based on this revelations, is the function of financial auditing ineffective in the public and nonprofit sector? In recent years, some independent auditors have

Merry-Go-Round (MGR) Reorganization

Merry-Go-Round (MGR), a clothing retiler located primarily in shopping mall,was founded in 1968. By the early 1990's the company hd gone public, and had expanded to approcimately 1500 stores, 15000 employess and $1 billion in annual sales. The compan's locations in malls targeted the youth and teen market. The company was lis

Auditing procedures and processes

This posting contains an APA formatted MS Word file containing information in regards to the responsibilites of an auditor in the performance of their duties; including their responsibility for discovering of subsequent events occurring after completion of fieldwork but before issuance of the audit report, and what must be don

Four objective accounting and auditing questions

3. Sprite Co. reports income of $300,000 from continuing operations before income taxes and a before-tax extraordinary loss of $80,000. All income is subject to a 30% tax rate. In the year's income statement, Sprite Co. would show the following line-item amounts for income tax expense and net income: $66,000 a

Auditing the Expenditure Cycle - Multiple Choice

REQUIRED: Indicate the best answer choice for each of the following. 1.The expenditure cycle would include: a. the purchase of another entity's stocks. b. the purchase of treasury stock. c. payroll transactions. d. payments by check. e. the purchase of another entity's bonds. 2.The specifi

Auditing the Expenditure Cycle

True/False REQUIRED: For each of the following items, indicate whether it is (T) True or (F) False. For those marked False, identify the error(s) and indicate the change or changes that are needed to make the statement true. 1. The expenditure cycle includes payroll transactions. 2. All purchase cycle disclo

Auditing the Revenue Cycle

True/False REQUIRED: For each of the following items, indicate whether it is (T) True or (F) False. For those marked ¿False,¿ identify the error(s) and indicate the change or changes that are needed to make the statement true. 1) The accounts receivable generated by credit sales transactions are nearly

Processes in a Company

Do you think that Policies and Procedures and supporting documentation are useful for all processes in a company? Why or why not? Explain?

File contains various solutions to auditing questions.

Agree or disagree? if disagree, please give simple explanation 1. Attribute sampling estimates the proportion of items that contain a percentage of error and can be used in tests of balances. 2. In applying the concept of materiality, the auditor must identify misstatements from the sample selected, calculate likely missta

Auditing and other assurance services

Lenter Supply Corp. is a medium-sized distributor of wholesale hardware supplied in southern Manitoba. It has been a client of yours for several years and has instituted excellent internal control for sales at your recommendation. In Providing control over shipments, the client has prenumbered"warehouse removal slips" that a

Auditing Case Study: Case 2.1 (Doughtie's Foods, Inc.) Q1 and 2

Case 2.1 (Doughtie's Foods, Inc.) In the late 1970s, William Nashwinter accepted a position as a salesman with Doughtie's Foods, Inc., a publicly owned food products company headquartered in Portsmouth, Virginia.1 The ambitious young salesman impressed his superiors with his hard work and dedication and was soon promoted to gen

Auditing Questions: Securities and Exchange Commission

Please access the Securities and Exchange Commission website through and select any public traded company. The objective of your assignment is to design audit programs for cash and inventory. As part of the assignment you must include the following information: 1. The name of the company and a brief descript

Auditing MC

To determine whether sales transactions have been recorded in the proper accounting period the auditor performs cutoff tests. Which of the following best describes the overall approach used when performing cutoff tests? A) Ascertain that management has included in the representation letter a statement that transactions have b

Audit Internal Controls Questions

John Harris, CPA, has been engaged to audit the financial statements of the Spartan Drug Store, Inc. Spartan is a medium-sized retail outlet that sells a wide variety of customer goods. All sales are for cash or check. Cashiers utilize cash registers to process theses transactions. There are no receipts by mail and there are no

Auditing - Multiple Choice Questions

1. Which of the following pairs of accounts would an auditor most likely analyze on the same audit documentation? A) Notes receivable and interest income. B) Accrued interest receivable and accrued interest payable. C) Notes payable and notes receivable. D) Interest income and interest expense. 2. Reference in

Auditing Multiple Choice

42. 10-K reports are: A) Another name for annual reports to stockholders B) Quarterly filings made by company with the SEC C) Annual filings made by company with SEC D) Filings made by company with SEC when a company 43. The management of Finner Company believes that "the statement of cash flow is not a very useful


1. Access the Journal of Accountancy article by Michael Ramos "Evaluate the Control Environment" from October 19, 2004. Hint: You can find this article in the eRosource Internet article section. Situation: You are a senior auditor for a Big 4 audit firm and you have been assigned to a new internal client. It is a US based c

Related Entity Transactions

It is common for an entity to have transactions with related entities?some of which are fully owned, some of which share common ownership, but are not otherwise related, and others where ownership is small but there is control. Required: a. Define related entity transactions and describe the appropriate accounting for relat

Auditing - Audit Reporting and Required Communications

32. After the fieldwork is completed, a partner of the CPA firm who has not been involved in the audit performs a second-partner documentation review. This second review usually focuses on A) The fair presentation of the financial statements in conformity with GAAP. B) Irregularities involving the client's management and