ne in accrued liabilities from last year.
Q: Please decide control risk, inherent risk and planned audit evidence will be affected (increase or…
A: Control risk is the possibility that financial statements would be materially misstated as a result…
Q: The internal auditors of Brown Electrical Company report to the controller. Due to changes made in…
A: Internal audit is the one which measure the internal controls involving the accounting procedure and…
Q: State the appropriate audit opinion that the auditor would require.
A: Among various Auditor's Opinions, one of the opinion can be Disclaimer of Opinion. Auditor needs to…
Q: Respond to each of the following comments that you heard related to the audit of Swan Company, a…
A:
Q: 24. During a consulting engagement involving the development of a new accounts payable system, an…
A: Answer: During a consulting engagement involving the development of a new accounts payable system,…
Q: After a while, Brekdak as head of the Accounting Department, realized that the system of record that…
A: The answer for the above practical question on consistency in applying policies and procedures for…
Q: The auditors of Landi Corporation wish to use a structured approach to nonstatistical sampling to…
A: Meaning of Audit Sampling Audit Sampling means applying a procedure to less than 100% of a…
Q: As the manager of the external audit team, you realize that the embedded audit module only writes…
A:
Q: For each situation, identify the appropriate audit report and briefly explain the rationale for…
A: Auditors report is a formal document prepared by the external auditor after the completion of audit…
Q: ou are auditing Hawthorne Industries. The preliminary risk assessment resulted in a high potential…
A: Here discuss the details of the main assertion which are related with the Travel expenses audit by…
Q: The following are various changes in audit circumstances. Audit Circumstance The client began…
A: Test of Details of Balance Auditors use this method to verify the details of individual transactions…
Q: financial statement assertion for accounts receivable
A: Option a is wrong because the lower value of receivable turnover than that of industry does not…
Q: During a consulting engagement involving the development of a new accounts payable system, an…
A: Answer: The auditor reviewing the disbursements process should b. Report the control weakness to…
Q: least likely to be your starting point in computing materiality
A: First option is wrong because normalized net income is one of the three benchmarks for computing…
Q: As an auditor, you run across some abnormalities in a company’s books. What you find, makes you a…
A: An Auditor’s report is a letter by auditor in which information containing that company’s financial…
Q: Which of the following is a correct statement regarding audit evidence? a. A large sample of…
A: An auditor is the skilled and qualified person who was appointed to examine the financial statements…
Q: The internal auditors of Tantacle Electrical Company report to the controller. Because of changes…
A: External Auditor: An external auditor is appointed by the organization to organize and examine the…
Q: nancial information you determine that there is a material misstatement in the accounts receivable…
A: INDEPENDENT AUDITOR’S’ REPORT TO THE MEMBERS OF FREEFALL INCORPORATEDReport on the Standalone…
Q: Your client is a company that produces high-quality palm oil (CPO) and palm kernel products. You…
A: Audit: It is a procedure for examining a company's financial statements. The goal of auditing is…
Q: An audit manager has led the audit of Topaz Ltd for the last three years. Evidence of a fraud…
A: Auditing It refers to the process under which a person who is called an auditor inspects, examines a…
Q: Which of the following procedures would an auditor most likely perform in searching for unrecorded…
A: Audit is the process of examining and verifying books of accounts and financial information and this…
Q: Which of the following procedures will an auditor most likely perform for year-endaccounts…
A: Answer: Option 3.
Q: After completing a horizontal and vertical analysis of the Balance Sheet and Income Statement. It…
A: The answer is stated below:
Q: Which of the following is the best audit procedure for determining the existence of unrecorded…
A:
Q: During a consulting engagement involving the development of a new accounts payable system, an…
A: The auditor reviewing the disbursements process should do which of the following? Answer - Report…
Q: Which of the following statements is incorrect?
A: In order to authenticate the financial statements which has been prepared by the company and in…
Q: An auditor is likely to perform each of the below procedures to obtain evidence regarding the…
A: Audit Contrary to unfavorable opinions, scope restrictions or the presence of significant…
Q: *................... You have been assigned to audit the financial statements of TRUE CORPORATION, a…
A: Rental Income: It is is an income account that is earned from leasing to third parties and is…
Q: il: As the assessed level of control risk increases, the acceptable level of detection risk…
A: As the assessed level of control risk increases, the acceptable level of detection risk decreases,…
Q: Risk Identification and Plan of Action The internal auditors of Brown Electrical Company report to…
A: Risk identification is the way to recognize the potential risk in the firm which may hinder the…
Q: Kim Company, a CPA firm, conducted an audit for the 2020 financial statements of Erin Corporation.…
A: Management fraud can be defined as the act or omission by management leading to intentional fraud…
Q: Audit Plan The auditors for Golden Gate Company have a gut feeling that liabilities may be…
A: A continuous and systematic methodology for the verification of the system programs in order to…
Q: An internal auditor plans to use an analytical review to verify the correctness of various operating…
A: When there is fraud in the account, the would not show a correct view.
Q: For each possible error and fraud numbered a through o, select one internal control from the…
A: Internal control procedure: Internal control procedure helps and enables the management to apply…
Q: 6. Audit Plan The auditors for Golden Gate Company have a gut feeling that liabilities may be…
A: Audit plan:- An audit plan is defined as the methodology for the continual verification of system…
Q: A. The risk the planned further audit procedures will not be able to detect misstatement should be…
A: Audit planning refers to the process of creating a strategy and the desired approach suitable needs…
Q: Didrikson Rubin, the auditor of Red Barn Farm Equipment, was verifying cash payments to vendors for…
A: Fraud: In an organization, a fraud is an intentional misrepresentation of facts in the accounting…
Q: internal auditors of Brown Electrical Company report to the controller. Because of changes made in…
A: Internal auditing is the measurement of internal controls involving accounting operations and…
Q: Which two of the following characterize the work of fraud examiners?a. Analysis of control…
A: Audit: Audit is the process of verification of the compliance of the financial statements. It…
Q: The financial records of the Movitz Company show that R. Dennis owes $4,100 on an account…
A:
Q: ns. During this year's annual financial audit, the external auditors noticed unusually large gaps in…
A: An embedded audit module (EAM), also known as continuous auditing, detects transactions that exceed…
Q: When accounts receivable are confirmed at an interim date, auditors need not be concerned witha.…
A: Step 1 Accounts receivable is frequently a vital asset so auditors required an extensive and…
Q: Assume that you will be unable to inspect the securities owned by the client on the balance sheet…
A: The audit and inspection are good tool that are used by auditor. An inspection is different than…
Q: Which of the following statements is incorrect? A. As the risk of material misstatement in the…
A: It is important for the Auditors to detect the material misstatement which are involved to the…
Q: The auditors for Golden Gate Company have a gut feeling that liabilities may be unrecorded. Their…
A:
Q: In considering overáll believes that misstatements aggregating $50,000 would have a material effect…
A: To establish a level of materiality, auditors rely on rules of thumb and professional judgment. They…
Q: Which of the following factors most likely would cause an auditor not to accept a new audit…
A: Internal Controls: Internal controls are the principles, procedures and rules applied by a company…
Q: After a while, Brekdak as head of the Accounting Department, realized that the system of record that…
A: Accounting standards are the rules or policies, required to be followed by public companies in…
Step by step
Solved in 2 steps
- The auditors for Golden Gate Company have a gut feeling that liabilities may be unrecorded. Their initial suspicions stem from a radical decline in accrued liabilities from last year. Golden Gate’s records are all computerized. Required Devise a plan to search the data files to perform a substantive test for identifying unrecorded liabilities.Audit PlanThe auditors for Golden Gate Company have a gut feeling that liabilities may be unrecorded. Their initial suspicions stem from a radical decline in accrued liabilities from last year. Golden Gate’s records are all computerized.Required:Devise a plan to search the data files to perform a substantive test for identifying unrecorded liabilitiesField, CPA, is auditing the financial statements of MillerMailorder, Inc. (MMI). Field has compiled a list of possible inherentand fraud risks in the revenue cycle that may result in the misstatementof MMI’s financial statements and a corresponding list ofinternal controls, which, if properly designed and implemented,could assist MMI in preventing or detecting material misstatements.For each risk numbered 1 through 15 in column 1, select one internalcontrol from column 2 (labeled a. through t.), which, if properlydesigned and implemented, most likely could assist MMI in preventingor detecting material misstatements. Internal controls can beselected for more than one risk.
- A competent auditor has done a conscientious job of conducting an audit, but because of a*clever fraud by management, a material fraud is included in the financial statements. The fraud, which is an. overstatement of inventory, took place over several years, and it covered up the fact that the company’s financial position was rapidly declining. The fraud was accidentally discovered in the latest audit by an unusually capable audit senior, and the SEC was immediately informed. Subsequent investigation indicated that the company was actually near bankruptcy, and the value of the stock dropped from P260 per share to PIO in less than 1 month. Among the losing stockholders were pension funds, university endowment funds, retired couples, and widows. The individuals responsible for perpetrating the fraud were also bankrupt. After making an extensive investigation of the audit performance in previous years, the SEC was satisfied that the auditor had done a high-quality audit and had followed…During a consulting engagement involving the development of a new accounts payable system, an internal auditor identified a control weakness. Although the weakness was reported to the manager of the systems development project, the manager decided to accept the risk because, in the manager's opinion, the risk was not significant. Six months after the implementation of the new system, the disbursements process was audited by another internal auditor who determined that the control weakness had impacted payment processing. The auditor reviewing the disbursements process should do which of the following? a. Request that the manager of the systems development project fix the system b. Report the control weakness to management and the audit committee c. Discuss the control weakness with the manager of the accounting system, but do not report the finding d. Disregard the control weakness because management previously decided to accept the risk e. None of the choicesThe internal auditors of Tantacle Electrical Company report to the controller. Because ofchanges made in the past year to several of the transaction processing programs, the internalauditors created a new test data set. The external auditors requested that the old date set alsobe run. The internal auditors, embarrassed, explained that they overwrote the original testdata set.Required:Outline any potential risks and determine the courses of action the external auditor shouldtake.
- 21. During a consulting engagement involving the development of a new accounts payable system, an internal auditor identified a control weakness. Although the weakness was reported to the manager of the systems development project, the manager decided to accept the risk because, in the manager's opinion, the risk was not significant. Six months after the implementation of the new system, the disbursements process was audited by another internal auditor who determined that the control weakness had impacted payment processing. The auditor reviewing the disbursements process should do which of the following? Group of answer choices Request that the manager of the systems development project fix the system None of the choices Disregard the control weakness because management previously decided to accept the risk Discuss the control weakness with the manager of the accounting system, but do not report the finding Report the control weakness to management and the audit committeeWhich of the following statements is not true? a. Tests of transactions are often performed several months prior to the balance sheet dateb. It is common to use analytical procedures at any time during the auditc. When controls are not considered effective, or when control deviations are discovered, substantive tests will be eliminatedd. Tests of details of balances are normally done lasWhich of the following is most closely related to the relevance of audit evidence?a. Auditors decide to physically inspect investment securities held by a custodian instead of obtaining confirmations from the custodian.b. In addition to confirmations of accounts receivable, auditors perform an analysis of the aging of accounts receivable to evaluate the collectability of accounts receivable.c. In response to less effective internal control, auditors increase the number of customer accounts receivable confirmations mailed compared to that in the prior year.d. Because of a large number of transactions occurring near year-end, auditors decide to confirm a larger number of receivables following year-end instead of during the interim period.
- You are the audit partner of ‘Power Auditors’ and you are auditing your client ‘FreefallIncorporated’.After finishing all the tests on the client’s financial information you determine that there is amaterial misstatement in the accounts receivable account of your client. This misstatementhas also caused the sales revenue account to be materially misstated. You have notified theclient about the misstatement but as of reporting date, client has not made any corrections.You also found misstatements in the fixed assets and accounts payable accounts, but theyare not material as per your assessment. You found no other misstatements in the otheraccounts.In addition to this, you also notice that the client has a large amount of debt which will bedue next year. As the business has suffered a loss this year and does not have enough cashflow at the end of the year to pay the debt next year, the client will need to secure someform of refinancing next year. Without this refinancing, there is a…As the manager of the external audit team, you realize that the embedded audit module only writes material invoices to the audit file for the accounts receivable confirmation process. You are immediately concerned that the accounts receivable account may be substantially overstated this year and for the prior years in which this EAM was used.RequiredExplain why you are concerned because all ‘‘material’’ invoices are candidates for confirmation by the customer. Outline a plan for determining if the accounts receivable are overstated.Please decide control risk, inherent risk and planned audit evidence will be affected (increase or decrease) in the following cases, and then list your analysis: i. You determine through analytical procedures that working capital, debt to equity ratio and other indicators of financial stability have worsened during the year. ii. In auditing inventories, you obtain an understanding of the internal control structure and perform test of controls. You find it significantly improved compared with that of the preceding year. You also observe that due to technology changes in the industry, the client's inventories may be somewhat obsolete. Please do fast ASAP fast