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External Auditing

Auditing Questions: Rules-Based Standards and Enron/Anderson

1. Explain how "rules-based" accounting standards differ from "principles-based" standards. How might fundamentally changing accounting standards from "bright-line" rules to principle-based standards help prevent another Enron-like fiasco in the future? Are there dangers in removing "bright-line" rules? What difficulties might b

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

Auditing accounts receivables

Why is important to place emphasis on the existence and rights (ownership)assertions when auditing accounts receivable? Whic audit procedures are usually the most useful for auditing the existence and rights assertions? What analytical procedures might be informative regarding the existence assertion?

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

One of the auditing standards states

One of the auditing standards states, "In all matters relating to the assignment, an independence in mental attitude is to be maintained by the auditor or auditors." Explain the concept of independence. Why is this important?

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

Internal control limitations and risks

Your CPA firm has just been engaged as the independent auditors for Drotos Theaters. The theater chain is opening a new theater in one month. Because of recent attention on the Sarbanes-Oxley Act, the main investment banking firm for Drotos' corporate operations has expressed concerns about internal control. Because of this, you

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

Auditing emphasis

Given the increased emphasis on corporate fraud, should auditors be required to look aggressively for fraud factors like collusion, circumvention, and management override? Why or why not?

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