EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
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Question
Chapter 22, Problem 26DQP
a.
To determine
State the purpose of the control for each of the preceding questions.
b.
To determine
Find out the type of potential financial statement misstatements if the controls are not in effect.
c.
To determine
List an
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Items 1 through 6 are common questions found in internalcontrol questionnaires used by auditors to obtain an understanding of internal controlfor owners’ equity. In using the questionnaire for a client, a “yes” response indicates apossible internal control, whereas a “no” indicates a potential deficiency.1. Are all entries in the owners’ equity accounts authorized at the proper level in theorganization?2. Are issues and retirements of stock authorized by the board of directors?3. Does the company use the services of an independent registrar or transfer agent?4. If an independent registrar and transfer agent are not used:(a) Are unissued certificates properly controlled?(b) Are cancelled certificates mutilated to prevent their reuse?5. Are common stock master files and stock certificate books periodically reconciledwith the general ledger by an independent person?6. Is an independent transfer agent used for disbursing dividends? If not, is an imprestdividend account maintained?
{Auditing}
46. Name the title of financial statement, which is audited to recognize total contribution of the shareholders in the company.
a.
Statement of financial performance
b.
None of the options
c.
Statement of flow of cash
d.
Statement of Owner’s equity
IDENTIFY THE EFFECT OF THE FOLLOWING TRANSACTION TO THE RISK OF MATERIAL MISSTATEMENT TO FINANCIAL STATEMENTS.
The internal audit reports to the chairman of the board who is a minority stockholder.
Does it have a:
A. INCREASE effect
B. DECREASE effect
C. NO EFFECT effect
Chapter 22 Solutions
EP AUDITING+ASSURANCE...-MYACCT.LAB
Ch. 22 - List four examples of interest-bearing liability...Ch. 22 - Prob. 2RQCh. 22 - Prob. 3RQCh. 22 - Prob. 4RQCh. 22 - Prob. 5RQCh. 22 - Distinguish between (a) tests of controls and...Ch. 22 - Prob. 7RQCh. 22 - Prob. 8RQCh. 22 - Prob. 9RQCh. 22 - Prob. 10RQ
Ch. 22 - Prob. 11RQCh. 22 - Prob. 12RQCh. 22 - Prob. 13RQCh. 22 - Prob. 14RQCh. 22 - Explain the relationship between the audit of...Ch. 22 - Prob. 16.1MCQCh. 22 - Prob. 16.2MCQCh. 22 - Prob. 16.3MCQCh. 22 - Prob. 17.1MCQCh. 22 - Prob. 17.2MCQCh. 22 - Prob. 17.3MCQCh. 22 - Prob. 18.1MCQCh. 22 - Prob. 18.2MCQCh. 22 - Prob. 18.3MCQCh. 22 - Items 1 through 6 are questions typically found in...Ch. 22 - Prob. 20DQPCh. 22 - Prob. 21DQPCh. 22 - Prob. 22DQPCh. 22 - Prob. 23DQPCh. 22 - Prob. 24DQPCh. 22 - The Redford Corporation took out a 20 -year...Ch. 22 - Prob. 26DQPCh. 22 - Prob. 27DQPCh. 22 - The following audit procedures are commonly...Ch. 22 - Prob. 30DQPCh. 22 - Prob. 31DQP
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- When accountants agree to perform a compilation or review of unaudited financial statements, the best way to avoid clients’ misunderstanding the nature of the work is to describeit completely ina. An engagement letter.b. The auditors’ opinion.c. A report to the clients’ board of directors at the close of the engagement.d. A management letter to the board of directors’ audit committee.arrow_forwardDuring an audit of an entity’s stockholders’ equity accounts, the auditor determines whether there are restrictions on retained earnings resulting from loans, agreements, or state law. This audit procedure most likely is intended to verify management’s assertion ofa. Existence or occurrence.b. Completeness.c. Valuation or allocation.d. Presentation and disclosure.arrow_forwardAn auditors’ report by independent accountantsa. gives investors assurance that the company’s financial statements conform to GAAP.b. is ultimately the responsibility of the management of the client company.c. ensures that the financial statements are error-free.d. gives investors assurance that the company’s stock is a safe investment.arrow_forward
- An auditors’ report by independent accountants…… Select one: a. is ultimately the responsibility of the management of the client company. b. ensures that the financial statements are error-free. c. gives investors assurance that the company’s stock is a safe investment. d. gives investors assurance that the company’s financial statements conform to GAAParrow_forward13. Which of the following is NOT an obligation or duties of an auditor? a. Inspect account books and accounting systems for efficiency b. Prepare detailed reports on audit findings c. Examine and evaluate financial and information systems d. Helps to prepare the financial statements of companiesarrow_forward16. What is the purpose of information presented in notes to financial statements? a. To present management's responses to auditor comments b. To correct improper presentation in the financial statements c. To provide disclosures required by generally accepted accounting principles d. To provide recognition of amounts not included in the total of the financial statements 17. Proper application of accounting principles is most dependent upon a. Existence of specific guidelines b. Oversight of regulatory bodies c. External audit function d. Professional judgment of the accountant 18. Which of the following is not a correct variation of the basic accounting equation? a. Asset = Liabilities +Equity b. Asset - Liabilities = Equity c. Asset - Equity = Liabilities d. Asset + Liabilities = Equity 19. Entity A's total liabilities are P50M, while its total equity is P10. Entity A's total assets are a. P60M b. P50M c. P40M d. Any of these 20. What is the effect on an entity's financial…arrow_forward
- Match each of the following provisions of the Sarbanes-Oxley Act (SOX) with its description. Major Provisions of the Sarbanes-Oxley Act Descriptions 1. Oversight board 2. Corporate executive accountability 3. Auditor rotation 4. Nonaudit services 5. Internal control a. Executives must personally certify the company’s financial statements. b. Audit firm cannot provide a variety of other services to its client, such as investment advising. c. PCAOB establishes standards related to the preparation of audited financial reports. d. Lead audit partners are required to change every five years. e. Management must document the effectiveness of procedures that could affect financial reporting.arrow_forwardWhich of the following is NOT a purpose of an audit of financial statements? a.To express an opinion on the financial statements b. To detect fraud c. To provide assurance to stakeholders d.To improve the company's financial reportingarrow_forwardPLEASE ANSWER THIS ASAP. THANK YOU SO MUCH. 1.Which of the following statements is incorrect? a. Management assertions are implied or expressed representations by management about classes of transactions, account balances and presentation and disclosures contained in the financial statements. b. Transaction cycles may vary from one entity to another and may also be affected by the nature of industry of the client. c. The primary goal of an auditor in an audit is to issue an opinion that the financial statements of an entity are fairly stated, in all material respects, in accordance with the applicable financial reporting framework. d. Reasonable assurance is moderate but not absolute level of assurance that the financial statements are free from material misstatements. 2. Which of the following statements does not pertain to responsibilities of management and those in charge of governance? a. Establish and implement internal controls relevant to the preparation of financial reports.…arrow_forward
- For which of the following purpose can the analytical procedure be used i) Better understanding of the client’s industry and business ii) Assess the client’s ability to continue as going concern iii) To understand the revenue growth, new investments, loans taken etc iv) To understand, if any, abnormal fluctuation in figures in Financial statements v) To reduce the need for detailed audit vi) To understand new changes in internal control environment Only i) , ii) , iii) and iv) Only i) , ii) , iv) and v) Only i) , ii) , iii) , iv) and v) All i) , ii) , iii) , iv) ,v) and vi)arrow_forwardThe area of the accounting profession that deals with providing information to meet the needs of the internal decision-makers. Select one: a. Auditing b. No correct answer c. Financial Accounting d. Management Accounting Which of the following statements are true? Select one: a. Both II & III b. Statement I: External analysis depends entirely on issued financial.Statement II: Interpretation and analysis both are different.Statement III: Financial analysis covers interpretation. c. Both I and III d. Both I & II e. I, II, III Which of the following statement is not true? Select one: a. A non-CPA may be the chief accountant of a business enterprise. b. A non-CPA may be engaged in Public accounting. c. To be a good accountant, one must have mastery of mathematics. d. A non-accounting graduate may work as a bookkeeper or accountant or accountant of a business enterprise.arrow_forward{Auditing} 44. From the following statements, identify the statement/s that will not participate in the audit of an entity. a. Bank Reconciliation statement b. Statement of Debtors c. All the options d. Statement of Creditorsarrow_forward
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