EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
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Chapter 24, Problem 24DQP
a.
To determine
Discuss the approach of Person L to sending the attorney letters and her follow-up on the responses.
b.
To determine
Discuss what should be done by the Person L about each of the letters.
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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?…
Ray, the owner of a small entity, asked Holmes, CPA, to conduct an audit of the entity’s records. Ray told Holmes that the audit was to be completed in time to submit audited financial statements to a bank as part of a loan application. Holmes immediately accepted the engagement and agreed to provide an auditors’ report within three weeks. Ray agreed to pay Holmes a fixed fee plus a bonus if the loan was granted.Holmes hired two accounting students to conduct the audit and spent several hours telling them exactly what to do. Holmes told the students not to spend time reviewing the controls but instead to concentrate on proving the mathematical accuracy of the ledger accounts and on summarizing the data in the accounting records that support Ray’s financial statements. The students followed Holmes’ instructions and, after two weeks, gave Holmes the financial statements, which did not include footnotes. Holmes studied the statements and prepared an unmodified auditors’ report. The…
While auditing the financial statements of Petty Corporation, the certified publicaccounting firm of Trueblue and Smith discovered that its client’s legal expense accountwas abnormally high. Further investigation of the records indicated the following:Since the beginning of the year, several disbursements totaling $15,000 had been madeto the law firm of Swindle, Fox, and Kreip.Swindle, Fox, and Kreip were not Petty Corporation’s attorneys. A review of thecanceled checks showed that they had been written and approved by Mary Boghas, thecash disbursements clerk. Boghas’s other duties included performing the end-of-monthbank reconciliation.Subsequent investigation revealed that Swindle, Fox, and Kreip are representing MaryBoghas in an unrelated embezzlement case in which she is the defendant. The checkshad been written in payment of her personal legal fees.Requireda. What control procedures could Petty Corporation have employed to prevent thisunauthorized use of cash? Classify each…
Chapter 24 Solutions
EP AUDITING+ASSURANCE...-MYACCT.LAB
Ch. 24 - Prob. 1RQCh. 24 - Explain why an auditor is interested in a clients...Ch. 24 - Prob. 3RQCh. 24 - Prob. 4RQCh. 24 - Prob. 5RQCh. 24 - Prob. 6RQCh. 24 - Prob. 7RQCh. 24 - Prob. 8RQCh. 24 - What major considerations should the auditor take...Ch. 24 - Identify five audit procedures normally done as a...
Ch. 24 - Prob. 11RQCh. 24 - Prob. 12RQCh. 24 - Prob. 13RQCh. 24 - Prob. 14RQCh. 24 - Prob. 15RQCh. 24 - Prob. 16RQCh. 24 - Prob. 17RQCh. 24 - Prob. 18.1MCQCh. 24 - Prob. 18.2MCQCh. 24 - Prob. 18.3MCQCh. 24 - Prob. 18.4MCQCh. 24 - Prob. 19.1MCQCh. 24 - Prob. 19.2MCQCh. 24 - Prob. 19.3MCQCh. 24 - Prob. 20.1MCQCh. 24 - Prob. 20.2MCQCh. 24 - Prob. 20.3MCQCh. 24 - Prob. 21.1MCQCh. 24 - Prob. 21.2MCQCh. 24 - Prob. 21.3MCQCh. 24 - Prob. 22DQPCh. 24 - In an audit of the Marco Corporation as of...Ch. 24 - Prob. 24DQPCh. 24 - The field work for the June 30, 2016, audit of...Ch. 24 - Prob. 26DQPCh. 24 - Prob. 27DQPCh. 24 - Prob. 28DQPCh. 24 - Prob. 29DQPCh. 24 - Prob. 30DQP
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