She can examine the buss condition herself or hire an

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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: (i) which of the 20 buses are parked in Danville's parking lot the night of August 31. (j) whether all of the buses are owned by Danville Bus Services. (k) the condition of each bus, using established guidelines. (l) 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: (1) 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 auditing. 2. Exposure to highly sophisticated statistical sampling and computer auditing techniques. 1. Possibility of limited exposure to diversity of enterprises and industries. 2. Bureaucracy of federal government. TAX AUTHORITY AGENT 1. Extensive training in individual, corporate, gift, trust and other taxes is available with concentration in area chosen. 2. Hands-on experience with sophisticated selection techniques. 1. Extensive training in audit of financial statements, compliance auditing and operational auditing. 2. Opportunity for experience in auditing, tax consulting, and management consulting practices. 3. Experience in a diversity of enterprises and industries with the opportunity to specialize in a specific industry. 4. Experience with risk assessment and sampling techniques 1. Extensive exposure to all segments of the enterprise with which employed. 2. Constant exposure to one industry presenting opportunity for expertise in that industry. 3. Likely to have exposure to compliance, financial and operational auditing. 1. Experience limited to taxes. 2. No experience with operational or financial statement auditing. 3. Training is not extensive with any business enterprise. 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 Requirements 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: [] 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.

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