Rich Pugh Unit 2 Project

Rich Pugh Unit 2 Project - Unit 2 Project 1-38 A) The main...

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Unit 2 Project 1-38 A) The main value of an audit is that it is unbiased report of a company’s financial statements. This assurance helps investors know how well a company is doing and whether they can feel safe investing with them or not. It helps creditors know that a company is being truthful about their finances and if they can trust them to pay back loans or credit purchase agreements. The community as a whole will feel better about purchasing items from a company if they know they are financially sound and will be around to help them if something happens to the product they purchase from them. B) An internal control audit provides value to the investing public by letting them know they are recording and disclosure of transactions and adjust audit procedures to search for errors in account balances. With this information, investor can be assured that the company they are investing with have quality internal controls over their record keeping and entry. If a company does not have good internal controls, chances are they will not have trustworthy financial statements and be a risky investment. C) An audit committee is a subcommittee of the board of directors. The reason an audit committee is important is that the board of directors was not independent of management and can be persuaded or pressured by management to do what they wanted. Independent members of the board did not take over ownership of auditing. With the induction of the audit committee, audit functions were taken out of managements hands and put into a committees hands that were not influenced by management; making the audits more reliable to all users. 1-40 A) I agree with this statement. The primary purpose of an audit is to ensure information is accurate and no fraud is found. B) I disagree with this statement. An independent auditor should be an outside third party that does not have contact with management or owners.
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C) I agree that major charities like Red Cross should be required to follow the same guidelines as public companies. Making charities report on internal controls will help keep them honest and let contributors know that there donations are being used properly. D)
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This note was uploaded on 08/22/2011 for the course AUDITING AC410 taught by Professor Prof during the Spring '11 term at Kaplan University.

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Rich Pugh Unit 2 Project - Unit 2 Project 1-38 A) The main...

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