rsm323h-d08 - UNIVERSITY OF TORONTO FACLUTY OF ARTS AND...

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Unformatted text preview: UNIVERSITY OF TORONTO FACLUTY OF ARTS AND SCIENCE & ' ROTMAN SCHOOL OF MANAGEMENT .RSM 323H1F Final Examination -DECEMBER 2008: 3 hours No aids allowed NANIE Student ID. Section: Monday 10-12, 1-3, 3-5 Instructions: 1. Write legibly. Illegible answers will not be graded. 2. There are 11 questions. Answer all questions in booklets. 3. Your invigilator will NOT clarify any questions for you during the test. You may make any assumptions you believe are needed to answer a question. However, you only receive marks for the answer if the assumptions you made are indeed needed for the question. Points Marks Awarded Question I/3 Total 65 Question 1 (5 marks) Describes the basic controls that might reduce risks related to sales and customer service? Question 2 (5 marks) Describe the cutoff tests the auditor may perform in an audit of the sales and customer service process in a wholesale operation. Question 3 (5 marks) Describe the procedures the auditor may use for determining if existing purchasing policies are being properly applied. Question 4 (5 marks) You are involved in the audit of a medium-sized manufacturer of furniture. What duties are in general segregated in the supply chain and production management process? What tests of controls can be used to investigate the segregation of duties? Question 5 (5 marks) Regardless of how an auditor obtains a sample, what three issues must the auditor consider when obtaining evidence using a sample-based audit procedure? Question 6 (5 marks) You have been assigned the job of obtaining a random sample of purchase orders from the purchase orders included in the purchases journal along with the related supporting documents, including the invoices which are selected using a random sample from the sequence of purchase orders for the year. DesCribe the steps for examining the purchase orders. Question 7 (5 marks) Your firm is reviewing its status and policies with regard to independence. You have been asked to research the nature of the threats to auditor independence and provide a brief report to the review committee. Question 8 (10 marks) In testing controls related to a client's processing of credit sales transactions, auditors need to define “deviations” in advance. Give seven examples of deviations fi'om control objectives. 2/6 Question 9 (10 marks) You are assigned to audit trade accounts payable at Green Corporation, whose business is wholesale and retail trade. Green purchases products from 1,000-2,000 manufacturers and sells the products to its retail and wholesale customers. The general ledger shows a trade accounts payable balance as of the balance sheet date in the amount of $42 million (the balance comprises 70% of current liabilities, 50% of total liabilities, and 35% of total liabilities and shareholders' equity). Green's accountants post summary entries from the purchases journal and from the cash disbursements journal to the accounts payable control account each month. The accounts payable manager gave you a detailed trial balance that lists all the recorded, unpaid invoices (recording date, vendor name, vendor invoice number, invoice date, and amount) subtotaled by vendor. Other members of the audit team have already decided to assess control risk at maximum for accounts payable. The engagement manager gave you last year's audit working papers and told you not to use the audit program from last year because it was no longer appropriate. The first part of your assignment is to write the audit program for the audit of Green's trade accounts payable. Required: For each of the general assertions (EXISTENCE, COMPLETENESS, and VALUATION) write specific audit procedures designed to produce appropriate evidence about Green's trade accounts payable balance. Question 10 (5 marks) Briefly explain the following: (a) the client letter of representation, (b) the internal control letter, and (c) the management letter. In your answer, indicate the purpose of the letter and to whom the letter is addressed. Question 11 (5 marks) What are the sanctions that can be imposed by the ICAO if a member is found guilty of violating one of the rules of professional conduct? 3/3 l ...
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This note was uploaded on 05/09/2011 for the course RSM 323 taught by Professor Lisaharvey during the Spring '11 term at University of Toronto.

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rsm323h-d08 - UNIVERSITY OF TORONTO FACLUTY OF ARTS AND...

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