Bus425 spring05 ploting

Bus425 spring05 ploting - r0/” U\V g Izzy/06 BUS 425...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 4
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 6
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 8
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 10
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: r0 /” U \V) ' g Izzy/06 BUS 425 Auditing Tad Miller 05/25/06 k" Engagement Planning, Internal Control Evaluation and the Audit of Cash 41 ll FIRST STANDARD OF FIELD WORK State the first standard of field work. Wm M“ 6+0 be CldQWOLiQicajplai/ihcoi Omd I/P (lsgiss—tan—l‘s, i? (Junta, curer be moped? ficcpev'wtsad . 4‘" 2. CLIENTACCEPTANCE With regard to a new client such as Cable Co, assume that Putnam Rhodes & Schaefer only has one office. With whom in Putnam Rhodes 8: Schaefer do we need to be concerned regarding independence. Describe "Covered Members.” Just list the positions in the firm you learned in Appendix B. You don‘t need have to remember their names Mvéonaomvia ngagtmam Mam v widow inn/tr cmm at Command (5" mt pun-nets WWW en agaw’lem—l Oih'ca 0m ‘_ manages-3 or “pm WV‘S‘VWO it'lflUfl widowed W10 ta Inn \0 hours 0% minutiae wortcliovlwz Chem. 0? 3. COMMUNICATION WITH PREDECESSOR AUDITOR What three points do auditing standards require the predecessor and successor auditor to discuss? -' DM-tvtnres m bQA‘P and Car/imp g * II‘COWIWWNCMQ WPWW WUVIQ%&W‘QM ab and \liagdlact-s, ‘PYOLM , omd mm mu Control recommendations - Whrjlvig Chanda m dudii-ar' “Y 4. RELATED PARTIES Describe or define what a related party is in an audit context. WW “200:de port \28 Owe Art/"teen. path 2% Who/\MVQ OK s—‘rvo neg mttuwta over mono m r , and Witt-240m. 0m Lunale er (MEMO; 0.014% Mil/105W? 41am ache m. "p 5. ANALYTICAL PROCEDURES Wire Co. had sales of $2,500,000 in 2004. Overall industry sales are up 10% in 2005 compared to 2004. On 5/31/05, Wire Co. acquired a small company that had $600,000 sales in 2004. In forming your expectations, what would you expect Wire Co's 2005 total consolidated sales to be in 2005. afloaooos \.\O : 4393502300 6 000,000 x “was 550,000 x mo -— $685,000 "SM/2352 list $53000 6. SARBANES OXLEY The Sarbanes-Oxley Act of 2002 covers four different groups in the 1V financial reporting process. List the four parties covered by the Act. mummy) mm C O matter "a x managtn smvt‘stuta Uudflms fia— 7. SARBANES OXLEY As a result of Sarbanes Oxley, the PCAOB establishes specific reporting requirements for management regarding the company's internal control structure. Specifically, the company's annual report must include the following three statements g pertaining to internal controls. - MGV]Q%LmQt’fiS Nepal/isles m3 4:0 QSJtCkWM‘ Wild mmvHG-l V‘ {MIMVMM t. it‘d tlfi‘tttl film-t a l s {l um ‘tsot‘r t0 blamed Q mth thols MMUQQWWM '3 macs Wlfil/t-l 0% W10 (Mach'wnrss 0? l0 Mttmod (ow/hols <59 8. CONTROL RISK W hat is the definition of control risk {3 1m volcth OtCOvnpanuj's-s 1mm Hal (iam’wis wm Roll lo pvgygfl+ 0V Olgittd l‘tnudtovnwar, V dig 9A INTERNAL CONTROL How does the committee of sponsoring organizations (COSO) define internal control rottss 0. PQC-ltd b . 0m WW '3 Board at Dimclor's, mmign, avid parser/tat dwcaiigzd ‘l'OPYOVldQ masomble assuman at two, swoon/Han 04km Qauowmg ammwmms; »-— Tallulolllha 05" Jil‘flOU/IClaiS’iwl’LY‘vvalS ‘ __ Q;%\t,lemt;té and ages-two wet-,2 ol} (3‘an 06m) n3 -— COVmphomcn witm mm and (enamel-eons ‘d' 10. COMPONENTS OF INTERNAL CONTROL List the five components of internal control. Qtnhol tvmmnmml l2 \R \L- ATS i233 wen—l . g QOVWol procedures WWO (ll/“id Commummhom Mfimllet l to gy- 11. SEGREGA HON OFDUTIES with regard to segregation of duties, what four fimctional responsibilities should be performed by different people F.— (7/ Wmnswh‘on off-tram excl-tons latte «king 0 l? ham 3 act-ab w C‘mlbd, ol Asses V Ettomlllw (ll Ulsth any 5 l0 stoned \JUUlMs, o $5 14. MaNAGEMENTASSERTIONS During the audit, you find an entry in the Cash Receipts journal for which there is no supportino remittance sli ; nor can you find a corresponding deposit on the bank statement. To which financial statement assertion does this condition relate? Carmel r ME; 3 MANAGEMENTASSERTIONS During the audit, your observed a sales order where the customer ordered goods and the shipping document where the goods were shipped to the customer. However, you are unable to find an invoice showing the customer was billed for the goods. Nor can you trace the shipment into the sales journal. To which financial statement assertion does this condition relate? ersitnra or econ—awe MdNAGEMENTASSERTIONS During the audit, as you review an invoice you find that the prices used to prepare the invoice are much lower than the prices on the official price list. To which financial statement assertion does this condition relate? MO Cot/hon OrrldX‘tldtunl-io I/l 15. AUDIT RISK MODEL W e know that detection risk is 1.00 at the beginning of every audit. Can we say that detection risk is low at the end of every successful audit? Explain what we 4/ can say about detection risk at the end of every audit. A ANN. and oi awn/3 BULL tar slut Cindi + N1 am Sat Jarrod- «tine (ltlwtlom {Skis last Jmoun WNW/Ll Viol wacossm “fill/tal- ll- ls low (\tw ls ambiguous) M m. and at Ultra audit we. can swarm OltitCh'om t we was Low anal; , ‘H—r 16. AUDIT RISK MODEL This is a private company, not subject to PCAOB standards. In the planning stage, prior to performing our audit tests, we preliminarily assess control risk as high. What does that imply about the relative extent of 'tests of controls' to the extent of ’substantive tests that we will perform during the audit? pr \ sub thmn QPYleRlLa Wild (OWlPdt/t \Nt Patio 1 m I e, 5 taste bread on cost, andlasl of Co trots am not BEWlZED. \Mvns Uctvnpla , smca Qthol His-l: is N \n we, would VQYRVM \Olfi 01? Sustromli wt ‘l-QS a, and mtmmal lest-Oi controls, it drug}. 17. AUDITRISK MODEL This is a private company, not subject to PCAOB standards. In the m planning stage, prior to performing our audit tests, we preliminarily assess control risk as :5 low. Explain which audit approach you would take and discuss the relative extent of 'tests of controls' to the extent of 'substantive tests that we will perform during the audit? 0m ugmnfimcaalw‘s is otptwatlt compamg WQ puhmm +343 batsman test , 0\ ndttsl ol controls 0w 2 not mtassm WA Qmutew llbWQVtt , 3mm, Control mt, ts M w M, would WOer lo lmgltm lOJrS 0i WSW at C0 Mick, Omol. Oll'lllj minimal SubSiCLVH‘NQJrQsl-s. __ mixed undies 2 Z aPlS. AUDIT RISK MODEL After performing tests of controls, our evidence indicates the client has great internal controls. Consequently we assess control risk as low and the required level V CB» of detection risk as high. What does this imply abOut the extent of substantive tests of DE 4- account balances we will need to perform. \Nhrm COM/Oi mlc is law and dtlrch‘oiq m k r «3 mg m WIL should Pulm'w: mmiwral But-aisle..th we lQ’sl s. , 7 burl \le 01E lagls of (Whole. 19. AUDITRISKMODEL SfiQQLIENTSUBJECT TOSARBAAES OXLEY We have obtained a sufficient understanding of the client's internal controls and properly documented that understanding. We believe the client's controls are ineffective and we preliminarily assess control risk as MAX r - \ o Describe " l - what factors would determine whether you take a reduced level of CR approach or a substantive approach ‘? /- - will you need to perform Tests of Controls - the amount of time you will spend Testing Controls relative to the mom“: of time spent performing Substantive Tests V l. 1-? COW/ltd may, vs main we W\\\‘l0k\CQ apv'tmav i.\ eubsth-rwe gkaVOClOA, bm if (om-rm use \s. low WQ \NHHOULQZZ) reduced \val Ole-CE approach. A Q A x . W\'\W$EC ’ m on Cdde s WEE, +0 .1 ct m Jigs ; o i 2 Che 8 k5 % PL (whole. 5 . lvvhms case, 'Slhce (1‘25 Oct i-ls MA X We Would pr.va m odor or: fimbavlavfit we «cs-ts , mm W? W 0 ed 0 SM n W Him w-ssnwrm 9% e :4. at cmhols J (Ab-l not 615 Mm , ’ 2 TESTS OF CONTROLS / SUBS TIVE TESTS Describe the objective of performing Tests 31,4, of Controls. Describe the objective of performing Substantive Tests. w 1; Go’fnola's y {)C {014ml ball \th Wt Pflfovmttst Ol controls \NQ am. pvlmmd lirain 0 $3305.38th Ql‘l‘QClWQVWSS ()l W (“ml '23 ml-e m l (0m vols. \wa Wt 0M pulmmm substantive lasts we believe MACH WQ Cl‘iml‘ * s lmlqv Vial Controls OLYQ genevauré Ql'leclng O‘Mlm’lm WLWWW “‘3. WW (kl $0M helm dlSClOSLLYQS my) inward balm/i023, r... .. 2. 3 |Zz «2‘? 21. UNDERSTANDING THE CLIENT'SACCOLWTING SYSTEM In order to document our understanding of the client's accounting system (not internal controls but accounting U\ system). We need to demonstrate that we understand the flow of transactions. Please list the steps between identifying "the various classes of significant transactions” and how these transactions get "placed in the financial statements and disclosures." 5> identify "the various classes of significant transactions" s imam mammal errors and Hand that W outw— Meow?! WWQWOGS m which glosmhcomnl Ci 3% as (we : 1- Winn? Qd . 2- DOCumerfl ed Chad 29 (:0 wind 3' ' WGCQYSQJ ucm M‘\”1V‘t(6 stavxdcuois 4. - "placed in the financial statements and disclosures" fl 2 TYPES OF DOCUMENTATION What are the three types documentation are typically used to 2 g an understanding of the internal controls? memorcvidwm ‘ lWrLYWM cannot washonau rc J}\0wc\rume J) 7 23. ‘ fl ‘ _ I ‘ qui‘e +64%» ,wwott Tm (Ohm/MW mwmcvx Warn \3 a. \(\\%\n \thMhOOd .Q'Or SIGNIFICANTDEFICIENCY/mTERML WEAKNESS Define Material Weakness. Walton} misstatmmm int/m Wanna) stain meats. 3) 24. FRiUD Define fraud. 7 \rttmtionm manviw WVS‘QH’Jdlmm’H" m Jana Qindncmgtodammd wmrq MQQVaMde/H MON {than intend“: (30v outsidetstobahaxn Art/IQ. I V‘fliSSJtMQmam and dot moan «rm vmsetmtawnn QNQV) 5? L0 ‘5 ‘15 25. THIRD STANDARD OF FIELD WORK write the third standard of field work 4 SdWciQm cempafitam av 1dr,an \‘s to be; OWHAQd-iro OHM (1. 0L bass: 3‘ o r Om O‘ptmom OJ; «in/lg ,Qm OWE \ OJ Sadat,me s . 26. BANK CONFIRMATION Regarding a bank confirmation. 1/ Who requests a confirmation from the bank? CMS'i'UWWLV % Where is the bank requested to send the confirmation? ilLLdH'O r / Describe information, other than cash balances, that may appear on a bank confirmation. )0 mammoth rtttipte 27. BANK TRANSFER SCHEDULE On the schedule of bank transfers, Check 1305 is for $650 from the Parent to the Subsidiary. In the Parent‘s books, the credit to cash is recorded on / Dec. 31, 2005. On the Subsidiary's books the debit to cash receipt is recorded on Jan. 1, 2006. Will this cause the consolidated cash balance to be overstated or understated as of 3 Dec. 31,2005? Paw w-t wasiokicw var tame 95w“ Bow \4- 600‘“ t/ / As at December-“ad ,2005 Maparant companws QWBOH dotted Cash mam, mu b2 Mdustodmd 28. LIABILITYACCOLWTS O r Und ri/ xist‘n Co lete 29. REVENUE ACCOUNTS Q ( 0w?~ Under B Occu Complete {WE Trace V 30. CASH ACCOLWTS NOT related to the previous problem With regard to a typical liability account as of Dec. 31, 2005. Are we most concerned about overstatement or understatement ? Are we most concerned about existence or completeness ? Will we vouch from the Gen. Ledger to the supporting documents or trace from the supporting documents to the Gen Ledger With regard to atypical revenue account. Are we most concerned about overstatement or understatement ? Are we most concerned about occurrence or completeness ‘? Will we vouch from the Gen. Ledger to the supporting documents or trace from the supporting documents to the Gen Ledger We are concerned that cash might be overstated Are we concerned that Cash Disbursements will be overstated or understated? Continuing with Cash Disbursements, are we concerned about occurrence or completeness ? Continuing with Cash Disbursements, will we vouch from the Gen. Ledger to the supporting documents or trace from the supporting documents to the GL? ...
View Full Document

This homework help was uploaded on 02/07/2008 for the course BUS 425 taught by Professor Tadmiller during the Spring '05 term at Cal Poly.

Page1 / 10

Bus425 spring05 ploting - r0/” U\V g Izzy/06 BUS 425...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online