Connect Access Card for Principles of Auditing & Other Assurance Services
21st Edition
ISBN: 9781260299366
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Chapter 16, Problem 48P
To determine
Identify the action that the auditor should recommend with respect to the receivable from the customer.
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Jones, CPA, has completed the audit of Sarack Lumber Supply Co.and has issued a standard unqualified report. In addition to a report on the overall financialstatements, the company needs a special audited report on three specific accounts: sales,net fixed assets, and inventory valued at FIFO. The report is to be issued to Sarack’s lessor,who bases annual rentals on these three accounts. Jones was not aware of the need for thereport on the three specific accounts until after the overall audit was completed.a. Explain why Jones is unlikely to be able to issue the audit report on the three specificaccounts without additional audit tests.b. What additional tests are likely to be needed before the report on the three specificaccounts can be issued?c. Assuming that Jones is able to satisfy all the requirements needed to issue the reporton the three specific accounts, write the report. Make any necessary assumptions.
While auditing the financial statements of Petty Corporation, the certified public accounting firm of Trueblue and Smith discovered that its client’s legal expense account was abnormally high. Further investigation of the records indicated the following:
Since the beginning of the year, several disbursements totaling $15,000 had been made to the law firm of Swindle, Fox, and Kreip.
Swindle, Fox, and Kreip were not Petty Corporation’s attorneys.
A review of the canceled checks showed that they had been written and approved by Mary Boghas, the cash disbursements clerk.
Boghas’s other duties included performing the end of-month bank reconciliation.
Subsequent investigation revealed that Swindle, Fox, and Kreip are representing Mary Boghas in an unrelated embezzlement case in which she is the defendant. The checks had been written in payment of her personal legal fees.
Required:
a. What control procedures could Petty Corporation have employed to prevent this unauthorized use of cash?…
During your annual audit of Walker Distributing Company, your assistant, Jane Williams, reports to you that, although a number of entries were made during the year in the general ledger account Notes Payable to Officers, she decided that it was not necessary to audit the account because it had a zero balance at year-end.
Required:
Do you agree with your assistant’s decision? Discuss.
Chapter 16 Solutions
Connect Access Card for Principles of Auditing & Other Assurance Services
Ch. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Identify three items often misclassified as...Ch. 16 - Prob. 4RQCh. 16 - Prob. 5RQCh. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - Prob. 8RQCh. 16 - Prob. 9RQCh. 16 - What safeguards should be employed when the...
Ch. 16 - You are asked by a client to outline the...Ch. 16 - Prob. 12RQCh. 16 - Prob. 13RQCh. 16 - Prob. 14RQCh. 16 - Prob. 15RQCh. 16 - What are loss contingencies? How are such items...Ch. 16 - Prob. 17RQCh. 16 - Prob. 18RQCh. 16 - Prob. 19RQCh. 16 - What is the meaning of the term commitment? Give...Ch. 16 - Prob. 21RQCh. 16 - What are subsequent events?Ch. 16 - Describe the manner in which the auditors evaluate...Ch. 16 - Prob. 24RQCh. 16 - Prob. 25RQCh. 16 - Prob. 26RQCh. 16 - In your audit of the financial statements of Wolfe...Ch. 16 - Prob. 28QRACh. 16 - Prob. 29QRACh. 16 - Prob. 30QRACh. 16 - Prob. 31QRACh. 16 - The auditors opinion on the fairness of financial...Ch. 16 - Prob. 33QRACh. 16 - Prob. 34QRACh. 16 - Prob. 35QRACh. 16 - Prob. 36QRACh. 16 - Prob. 37AOQCh. 16 - Prob. 37BOQCh. 16 - Prob. 37COQCh. 16 - When auditing the statement of cash flows, which...Ch. 16 - The search for unrecorded liabilities for a public...Ch. 16 - The aggregated misstatement in the financial...Ch. 16 - Prob. 37GOQCh. 16 - Prob. 37HOQCh. 16 - Prob. 37IOQCh. 16 - Prob. 37JOQCh. 16 - Prob. 37KOQCh. 16 - Which of the following events occurring on January...Ch. 16 - Prob. 38OQCh. 16 - Prob. 39OQCh. 16 - Prob. 40OQCh. 16 - Match the following terms to the appropriate...Ch. 16 - Prob. 42OQCh. 16 - Prob. 43PCh. 16 - Prob. 44PCh. 16 - Prob. 45PCh. 16 - Prob. 46PCh. 16 - Prob. 47PCh. 16 - Prob. 48PCh. 16 - The audit staff of Adams, Barnes Co. (ABC), CPAs,...Ch. 16 - Prob. 50RDC
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