1. Observation of inventories is a required audit procedure whenever a. inventories are material. b. inventories are material and it is practicable and reasonable. c. it is practicable and reasonable. d. the auditor considers it to be necessary. e. inventories are material and the auditor considers it to be necessary.
Can anyone help with the following study guide? Thank you. 1. Define lapping and give an example. 2. What is a substantive test of transactions? How would it be applied to accounts receivable an inventory? 3. What is the difference between a positive and negative confirmation? When are they used and why? 4. List the
Merry-Go-Round (MGR), a clothing retailer located primarily in shopping malls, was founded in 1968. By the early 1990's, the company had gone public, and had expanded to approximately 1,500 stores, 15,000 employees, and $1 billion in annual sales. The company's locations in malls targeted the youth and teen market. The company w
On October 21, Rand & Brink, a CPA firm, was retained by Suncraft Appliance Corporation to perform an audit for the year ended December 31, A month later, James Minor, president of the corporation, invited the CPA firm's partners, George Rand and Alice Brink, to attend a meeting of all officers of the corporation. Mr. Minor op
1. A company has a large amount of goods returned during the last month of the fiscal year and the first month of the new fiscal year. Returns are sometimes done for exchanges. The returns were recorded when credit memos were issued usually between 6 to 8 weeks after weeks from the return of the goods. The procedure that would
Consider the following scenario: As a Staff I assigned to the audit of a publicly traded company, your senior has asked you to evaluate both share-based payment reporting and special purpose entities (SPE) reporting for the company. Research share-based payment reporting and SPE reporting, then write an executive memo that
Auditing and CPAs are discussed: possible defense against litigation for deficiency in audit of accounts receivable.
In confirming accounts receivable on December 31, 2007 the auditor found 15 discrepancies between the customers' records and the recorded amounts in the accounts receivable master file. A copy of all confirmations that had exceptions was turned over to the company controller to investigate the reason for the difference. He, in
What is the purpose of internal control? Why is internal control important?
Your client, a manufacturer of computer components, has experienced slowing demand for its product. Recently, it cut back from three shifts a day to two shifts a day, and the company has eliminated the backlog of orders that existed in prior years by providing financing to customers. Newspaper reports indicate that competition h
CSSC wants to be ensured that the audit report for year-end 2005 is a standard unqualified audit report. Management has requested that you create a presentation about how to obtain an unqualified audit report. Include the following details: - What are the circumstances that could prevent the external auditors from providing a
You have learned that the internal control framework for most U.S. companies is the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control-Integrated Framework issued in 1992. Complete the following: Identify the Treadway Commission discussing its origin, history, and purpose. List the
To properly assess the internal controls in place at CSSC, you have found that there are three major objectives that an entity should follow in designing an effective internal control system: - reliability of financial reporting - efficiency and effectiveness of operations - compliance with laws and regulations Explain w
Why are standards important for Internal Auditors and Fraud Examiners?
Successfully operational auditing starts with the auditor having an understanding of the following: 1. what consists of its core products, 2. business units, and 3. employee and customer base. How can the auditor begin to survey the business to begin to put an audit plan together? What resources are available or shou
I have a multiple choice practice test/study guide for my auditing class below. Please help with the answers for this study guide. 1. The definition of auditing states that the auditor A. objectively obtains evidence B. is independent C. must evaluate internal control D. none of the above
Please see the attached file.
What are the three most important improvements in the governance structure that could result from SOX?
What information is provided in the auditors' report? Does the audit report offer any guarantees? Explain. What do you think that the general public believes the auditors are providing?
17-27 (Substantive tests for stockholders' equity balances) Jones, CPA, the continuing auditor of Sussex, Inc., is beginning the audit of the common stock and treasury stock accounts. Jones has decided to design substantive tests with control risk at the maximum level. Sussex has no par, no stated value common stock, and acts a
REQUIRED: (1).Comment on the following: "Auditors must decide, based on cost considerations, whether to test the design effectiveness or operating effectiveness of controls." (2).Comment on the following: "All controls should be tested either prior to or on the 'as of ' date." (3).If an adverse internal control report is
REQUIRED: (1) Discuss management's four overall responsibilities with respect to internal control over financial reporting that arise from the SEC's implementation of the Sarbanes-Oxley Act of 2002. (2) Discuss what is meant by a "walkthrough." Must walkthroughs be performed during audits of internal control over financial r
REQUIRED: 1.Discuss the basic sequence of activities in cash collections. 2.Explain why a list of cash remittances should be made and sent to accounting departments, rather than to the accountants directly, so they can enter the credits to customers' accounts accurately.
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
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
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
I will attach the case study there are 7 questions I need help with.
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?
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
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
Which of the following combinations of procedures would an auditor be most likely to perform to obtain evidence about fixed-asset additions?
6. Which of the following combinations of procedures would an auditor be most likely to perform to obtain evidence about fixed-asset additions? a.Inspecting documents and physically examining assets. b. Recomputing calculations and obtaining written management representations. c. Observing operating activities and comparing b