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Practice Problems Ch. 8 (ACCT-422)

Practice Problems Ch. 8 (ACCT-422) - Chapter 8 Practice...

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Chapter 8 Practice Problems 8-25 a. (3) b. (3) c. (4) d. (1) 8-26 a. (1) b. (4) c. (4) 8-27 a. (4) b. (1) c. (2) d. (4) 8-28 Audit Activities Related Planning Procedure 1. Send an engagement letter to the client. (1) Accept client and perform initial audit planning 2. Tour the client’s plant and offices. (2) Understand the client’s business and industry 3. Compare key ratios for the company to industry competitors. (4) Perform preliminary analytical procedures 4. Review management’s controls and procedures. (3) Assess client’s business risk 5. Identify potential related parties that may require disclosure. (2) Understand the client’s business and industry 6. Identify whether any specialists are required for the engagement. (1) Accept client and perform initial audit planning 7. Review the accounting principles unique to the client’s industry. (2) Understand the client’s business and industry. 8. Determine the likely users of the financial statements. (1) Accept client and perform initial audit planning.
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8-35 RATIO NUMBER NEED FOR INVESTIGATION REASON FOR INVESTIGATION NATURE OF INVESTIGATION 1. Yes Current ratio has decreased from previous year and is significantly
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