a) Explanation The identified user is the user which is known by the auditor who is going to use the audited financial statements. In identified user case, the identity of the user is known to the auditor. As per the case given, it is not mentioned whether the identity of the user was known to the auditor... ( b) To determine Introduction: Auditor is appointed by the company in order to get their financial statements checked whether they are authentic or reliable for further usage by the shareholders and other users. The exceptions that might argued by the Bank F against the identified user test.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN: 9781337619455

Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher: Cengage Learning

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Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and appl…

Question

Chapter 4, Problem 18RQSC

To determine

Introduction: Auditor is appointed by the company in order to get their financial statements checked whether they are authentic or reliable for further usage by the shareholders and other users.

Thecircumstances in which the bank can be an identified user.

(b)

To determine

Introduction: Auditor is appointed by the company in order to get their financial statements checked whether they are authentic or reliable for further usage by the shareholders and other users.

The exceptions that might argued by the Bank F against the identified user test.

Expert Solution & Answer

Chapter 4 Solutions

Auditing: A Risk Based-Approach (MindTap Course List)

Ch. 4 - Prob. 1CYBK Ch. 4 - Prob. 2CYBK Ch. 4 - Prob. 3CYBK Ch. 4 - Prob. 4CYBK Ch. 4 - Prob. 5CYBK Ch. 4 - Prob. 6CYBK Ch. 4 - Prob. 7CYBK Ch. 4 - Prob. 8CYBK Ch. 4 - Prob. 9CYBK Ch. 4 - Prob. 10CYBK

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Read the following scenario about Strang Corporation and identify the substantive procedures that the CPA (Elaine Stanley) should perform to determine whether lapping exists. Do not discuss deficiencies in the system of internal control. During the year, Strang Corporation began to encounter cash flow difficulties, and a cursory review by management revealed receivable collection problems. Strang’s management engaged Elaine Stan ley, CPA, to perform a special investigation. Stanley studied the billing and collection cycle and noted the following: The accounting department employs one bookkeeper who receives and opens all incoming mail. This bookkeeper is also responsible for depositing receipts, filing daily remittance advices, recording receipts in the cash receipts journal, and posting receipts in the individual customer accounts and the general ledger accounts. There are no cash sales. The bookkeeper prepares and controls the mailing of monthly statements to customers. The concentration of functions and the receivable collection problems caused Stanley to suspect that a systematic theft of customers’ payments through a delayed posting of remittances (lapping of accounts receivable) is present.

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