AUDITING+ASSURANCE SERVICE(LL) W/ ACCES
17th Edition
ISBN: 9780135635193
Author: Elder
Publisher: PEARSON
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Question
Chapter 1, Problem 21DQP
a and b
To determine
Identify the type of auditor and the type of audit for the given items.
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In the normal course of performing their responsibilities, auditors often conduct audits or reviewsof the following:1. The computer operations of a large corporation to evaluate whether the internal controlsare likely to prevent misstatements in accounting and operating data.2. Financial statements for use by stockholders when there is an internal audit staff.3. A bond indenture agreement to make sure a company is following all requirements of thecontract.4. Internal controls at a casino to ensure the casino is in compliance with federal and stateregulations.5. Computer operations of a corporation to evaluate whether the computer center is beingoperated as efficiently as possible.6. Annual statements for the use of management.7. Operations of the IRS to determine whether the internal revenue agents are using theirtime efficiently in conducting audits.8. Statements for bankers and other creditors when the client is too small to have an auditstaff.9. Financial statements of a branch of…
In the normal course of performing their responsibilities,auditors often conduct audits or reviews of the following:1. Federal income tax returns of an officer of the corporation to determine whether heor she has included all taxable income in his or her return.2. Financial statements for use by stockholders when there is an internal audit staff.3. A bond indenture agreement to make sure a company is following all requirementsof the contract.4. Internal controls at a casino to ensure the casino is in compliance with federal andstate regulations.5. Computer operations of a corporation to evaluate whether the computer center isbeing operated as efficiently as possible.6. Annual statements for the use of management.7. Operations of the IRS to determine whether the internal revenue agents are usingtheir time efficiently in conducting audits.8. Statements for bankers and other creditors when the client is too small to have anaudit staff.9. Financial statements of a branch of the federal…
You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit,
(b) You recognized the treasurer who was convicted of fraud several years ago.
Identify the problems and explain them in relation to the internal environment.
Chapter 1 Solutions
AUDITING+ASSURANCE SERVICE(LL) W/ ACCES
Ch. 1 - What are the information and established criteria...Ch. 1 - Prob. 2RQCh. 1 - Discuss changes in accounting and business...Ch. 1 - Prob. 4RQCh. 1 - Identify the three main ways information risk can...Ch. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 8RQCh. 1 - Prob. 9RQCh. 1 - Prob. 10RQ
Ch. 1 - Prob. 11RQCh. 1 - Prob. 12RQCh. 1 - Prob. 13.1MCQCh. 1 - Prob. 13.2MCQCh. 1 - Prob. 13.3MCQCh. 1 - Prob. 14.1MCQCh. 1 - Prob. 14.2MCQCh. 1 - Prob. 14.3MCQCh. 1 - Prob. 15.1MCQCh. 1 - Prob. 15.2MCQCh. 1 - Prob. 15.3MCQCh. 1 - Prob. 16DQPCh. 1 - Prob. 17DQPCh. 1 - Prob. 18DQPCh. 1 - Prob. 19DQPCh. 1 - Prob. 20DQPCh. 1 - Prob. 21DQPCh. 1 - Prob. 22DQPCh. 1 - Prob. 23DQPCh. 1 - As discussed in the chapter opening vignette and...Ch. 1 - Prob. 25DQP
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- The following are parts of a typical audit for a company with a fiscal year end of July 31. Set acceptable audit risk and decide preliminary judgment about materiality and performance materiality. Understand internal control and assess control risk. Perform substantive analytical procedures for accounts payable. Confirm accounts payable. Perform tests of controls and substantive tests of transactions for the acquisition and payment and payroll and personnel cycles. Perform other tests of details of balances for accounts payable. Perform tests for review of subsequent events. Accept the client. Issue the audit report. Required Identify the phase of the audit in which each activity occurs. Put parts 1 through 9 of the audit in the sequential order in which you would expect them to be performed in a typical audit. Identify those parts that will frequently be done before July 31.arrow_forwardThe internal control procedures in Dayton Company result in the following provisions.Identify the principles of internal control that are being followed in each case. (a) Employees who have physical custody of assets do not have access to the accounting records. Select the principle of internal control Human resource controlsSegregation of dutiesEstablishment of responsibilityPhysical controlsIndependent internal verificationDocumentation procedures (b) Each month, the assets on hand are compared to the accounting records by an internal auditor. Select the principle of internal control Establishment of responsibilityHuman resource controlsPhysical controlsIndependent internal verificationDocumentation proceduresSegregation of duties (c) A prenumbered shipping document is prepared for each shipment of goods to customers. Select the principle of…arrow_forwardYou are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit, (g) Your preliminary assessment is that the accounting systems are well designed and that they employ effective internal control procedures. Identify the problems and explain them in relation to the internal environment.arrow_forward
- Lajod Company has an internal audit department consisting of a manager and three staff auditors. The manager of internal audits, in turn,reports to the corporate controller. Copies of audit reports are routinely sent to the auditcommittee of the board of directors as well as to the corporate controller and the individualresponsible for the area or activity being audited.The manager of internal audits is aware that the external auditors have relied on theinternal audit function to a substantial degree in the past. However, in recent months,the external auditors have suggested there may be a problem related to the objectivity ofthe internal audit function. This objectivity problem may result in more extensive testingand analysis by the external auditors.The external auditors are concerned about the amount of nonaudit work performedby the internal audit department. The percentage of nonaudit work performed by theinternal auditors in recent years has increased to about 25% of their total…arrow_forwardA public accounting firm’s independence is not impaired when members of the auditengagement team does which of the following for a public company audit client?a. Prepares special purchase orders for active plutonium in secure national defense installations.b. Completes operational internal audit assignments under the directions of the client’sdirector of internal auditing.c. Prepares outsourced internal audit work on the client’s financial accounting control monitoring.d. Prepares actuarial assumptions used by the client’s actuaries for life insurance actuarialliability determination.e. All of the above would impair the public accounting firm’s independencearrow_forwardWhen auditing with “fraud awareness,” auditors should especially notice and follow up employee activities under which of these conditions?a. The company always estimates the inventory but never takes a complete physical count.b. The petty cash box is always locked in the desk of the custodian.c. Management has published a company code of ethics and sends frequent communication newsletters about it.d. The board of directors reviews and approves all investment transactions.arrow_forward
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