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
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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
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
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
13. For effective internal control, the accounts payable department generally should a. Stamp, perforate, or otherwise cancel supporting documentation after payment is mailed. b. Ascertain that each requisition is approved as to price, quantity, and quality by an authorized employee. c. Obliterate the quantity ordered on the
Knowing that my company 2007 audit will include attestation services, I want to know more about what attestation services encompass and what my team and I can do to prepare for this service. Brainstorm with the auditing department about these: What are attestation services? What may I request from the CPA firm in regard
The privately owned company that you work for has been awarded a contract that will require submission of the company's audited financial statements. The owner of the company is not familiar with audits and audited financial statements. As the Controller, prepare a 700-1,050-word report to the owner explaining the work of indepe
How is an auditor's examination affected when a client engages in significant related- party transactions? What measures should an auditor take to determine that such transactions have been properly recorded by a client?
12.48 Departures from GAAP. On January 1, Graham Company purchased land (the site of a new building) for $100,000. Soon thereafter, the Highway Department announced a new feeder roadway route that would run alongside the site. The effect was a dramatic increase in local property values. Nearby comparable land sold for $700,000 i
In a discussion between Peters and Ferrel, Two auditing students, Peters made the following statement: "A CPA is a professional person who is licensed by the state for the purpose of providing an independent expert opinion on the fairness of financial statements. To maintain an attitude of mental independence and objectivity in
1. Which is better, statistical sampling or nonstatistical sampling? Why? 2. Should Generally Accepted Auditing Standards prescribe specific risk levels that auditors must use? Why or why not?
Assume the auditors encountered the following separate situations when deciding upon the report to issue for the current-year financial statements. 1. The auditor decided that sufficient competent evidence could not be obtained to complete the audit of significant investments the company held in a foreign company. 2. The c
Please help with the following problem about auditing. Provide at least 200 words in the solution. How does the auditor determine materiality? Will materiality be the same for all auditors? Why or why not?
16-38) In connection with an audit of the financial statements of Olympia Company, the auditors are reviewing procedures for accumulating direct labor-hours. They learn that all production is by job order and that all employees are paid hourly wages, with time and a half for overtime hours. Olympia's direct labor-hour input p
12-22) At the beginning of your audit of Crestview Manufacturing Company's financial statements for the year ended December 31, 200X, the company president confides in you that Henry Ward, an employee, is living on a scale in excess of that which his salary would support. The employee has been a buyer in the purchasing departm
Objective: Evaluate Results Mel Adams is a partner in a medium-sized CPA firm and takes an active part in the conduct of every audit he supervises. He follows the practice of reviewing all audit files of subordinates as soon as it is convenient, rather than waiting until the end of the audit. When the audit is nearly finis
1. How much should the government regulate the CPA profession? 2. Given the recent accounting scandals, how much confidence should the public really have in financial audits? (Consider Enron, Health South, World Com, Tyco.)
Design & Perform Analytical Procedures for accounts in the sale & collection cycle. Johnson Clock Company sells specialty clocks, watches, and other time-keeping devices. Since its inception, the company hjas sold items through its home office store and at industry and collector trade shows around the country. To meet the
Select representative samples. a) In each of the following independent problems, design an unbiased random sampling plan, using an electronic spreadsheet or a random number generator program. The plan should include defining the sampling unit and establishing a numbering system for the population. After the plan has been de
The following are selected transaction-related audit objectives and audit procedures for sales transactions: Transaction-Related Audit 0bjectives 1. Recorded sales exist. 2. Existing sales are recorded. 3. Sales transactions are properly included in the accounts receivable master file and are correctly summarized. Proce
Your audit firm is auditing your client Jo-Jo Jolly Products. The company is a small regional manufacturing firm located in Rye, New York. The company manufactures and sells crayons and pencils directly to retail stores. Your firm is auditing the financial statements of this company as of the year ended December 31, 2006. Du
1. Immediately upon receipt of cash, a responsible employee should a. Record the amount in the cash receipts journal. b. Prepare a remittance listing. c. Update the subsidiary accounts receivable records. d. Prepare a deposit slip in triplicate. 2. Upon receipt of customers' checks in the mail room, a responsible empl
Nova Land Development Corporation is a closely held corporation engaged in purchasing large tracts of land, subdividing the tracts, and installing paved streets and utilities. The Corporation does not construct buildings for the buyers of the land and does not have any affiliated construction companies. Undeveloped land usually
You have been engaged by the management of Alden, Inc., to review its controls over the purchase, receipt, storage, and issue of raw materials. You have prepared the following comments, which describe Alden's procedures. 1) Raw materials, which consist mainly of high-cost electronic components, are kept in a locked storeroom.
Ace Corporation does not conduct a complete annual physical count of purchased parts and supplies in its principal warehouse, but uses statistical sampling instead to estimate the year-end inventory. Ace maintains a perpetual inventory record of parts and supplies and believes that statistical sampling is highly effective in det
SECTION III: YRS, Incorporated Balance Sheet Year Ended December 31, 2006 Cash 100 Accounts Receivable 200 Total Assets 300 Accounts Payable 150 Capital Stock 100 Total 250 YRS Incorporated Income Statement for the Period ending December 31, 2006 Net Sales 500 Cost of Goods sold 10
Fred Stern & Company, Inc. - Auditing Case. See attached file for full problem description.
What types of opinions does an auditor issue other than unqualified? How does an opinion other than unqualified affect the client? In your opinion, which is the worst? What are the circumstances that warrant each type of opinion?
What is meant by the evaluation of a client's ability to continue as a going concern? What are some situations that would require modification of the auditor's opinion related to going concern? What is the auditor's responsibility for assessing a client's ability to continue as a going concern?
If a company's control risk is low, the auditor needs to gather evidence on the operating effectiveness of the controls. Required a. For each of the following control activities, indicate the audit procedure the auditor would use to determine its operating effectiveness. b. Briefly indicate the audit implication; that is,