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Unformatted text preview: ermine the fair market
value of each bus.
(4) Annaliese Haraldsson, CPA, appears qualified, as a
competent, independent person . She is a CPA, and she spends
most of her time auditing used automobile, bus, and truck
dealerships, and has experience that is consistent with the
nature of the engagement.
(5) The report results are to include:
which of the 20 buses are parked in Danville's parking
lot the night of August 31.
whether all of the buses are owned by Danville Bus
the condition of each bus, using established
fair market value of each bus using the current blue
book for buses.
b. The only parts of the audit that will be difficult for Haraldsson are:
Evaluating the condition, using the guidelines of poor, good,
and excellent. It is highly subjective to do so. One method is
to find the “blue book” value. (Note: Kelley Blue Book is a
United States automotive vehicle valuation company that
gives used vehicle pricing information. Because of its
popularity, the term “blue book” has become synonymous
with the car’s market value.) If she uses a different criterion
than the "blue book," the fair market value will not be
meaningful. Her experience will be essential in using this
guideline. 6-12 (2) Determining the fair market value, unless it is clearly defined
in the blue book for each condition. 1-21 a. The major advantages and disadvantages of a career as an CAO
auditor, tax authority agent, CPA, or internal auditor are:
EMPLOYMENT ADVANTAGES DISADVANTAGES CAO AUDITOR 1. Increasing opportunity for
experience in operational
2. Exposure to highly
sampling and computer
auditing techniques. 1. Possibility of limited
exposure to diversity of
enterprises and industries.
2. Bureaucracy of federal
AGENT 1. Extensive training in
individual, corporate, gift,
trust and other taxes is
available with concentration
in area chosen.
2. Hands-on experience with
1. Extensive training in audit of
compliance auditing and
2. Opportunity for experience in
auditing, tax consulting, and
3. Experience in a diversity of
enterprises and industries
with the opportunity to
specialize in a specific
4. Experience with risk
assessment and sampling
1. Extensive exposure to all
segments of the enterprise
with which employed.
2. Constant exposure to one
opportunity for expertise in
3. Likely to have exposure to
compliance, financial and
operational auditing. 1. Experience limited to
2. No experience with
operational or financial
3. Training is not extensive
with any business
1. Exposure to taxes and to
the business enterprise
may not be as in-depth as
the internal revenue agent
or the internal auditor.
2. Likely to be less exposed
to operational auditing
than is likely for internal
auditors. CPA INTERNAL
AUDITOR 6-13 1. Little exposure to taxation
and the audit thereof.
2. Experience is limited to
one enterprise, usually
within one or a limited
number of industries. (b) Other auditing careers that are available are: Auditors within many of the branches of the federal government
(e.g., Atomic Energy Commission) Auditors for many state and local government units (e.g., state
insurance or bank auditors)
1-22 a. The conglomerate should either engage the management advisory
services division of a CPA firm or its own internal auditors to
conduct the operational audit.
b. The auditors will encounter problems in establishing criteria for
evaluating the actual quantitative events and in setting the scope to
include all operations in which significant inefficiencies might exist.
In writing the report, the auditors must choose proper wording to
state that no financial audit was performed, that the procedures
were limited in scope and that the results reported do not
necessarily include all the inefficiencies that might exist. 1.1 Internet Problem Solution: Sarbanes—Oxley Act Internal Control Reporting
The Sarbanes-Oxley Act (SOX), also known as the Public Company
Accounting Reform and Investor Protection Act, was signed into law on
July 30, 2002. Considered by many to be the most sweeping corporate
reform legislation since the 1933 and 1934 securities legislation, SOX
ushered in a variety of new requirements including reporting on internal
control over financial reporting. The newly created Public Company
Accounting Oversight Board (PCAOB) was charged with establishing
standards applicable to audits of internal control over financial reporting.
Visit the PCAOB’s website (below) to review the full text of SOX to answer
the following questions:
[http://www.pcaobus.org/About_the_PCAOB/Sarbanes_Oxley_Act_of_2002.pdf] 1. According to Section 404 of SOX a public company’s annual report
must include an internal contr...
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This note was uploaded on 02/04/2014 for the course ACCOUNTING 211 taught by Professor Alikapur during the Fall '13 term at American University of Sharjah.
- Fall '13