vvvReview for Exam #2
 The audit risk against which the auditor and those who rely on his or
her opinion require
reasonable protection is a combination of two separate risks at the
assertion level. The first risk
(consisting of inherent risk and contro
1. The Enron audit failure has resulted in a serious crisis of confidence on the part of the
general public in the U.S. accounting profession. Please list the parties who you believe are most
responsible for that crisis after you watch the vide
Homework 4. Bruno Drinks Inc.
(A Business Risk Case, modified based on an ACCA exam question) You are a senior auditor at
Zales and Brook LLP, a CPA firm. Bruno Drinks Inc. is a large publicly traded firm based in
California and has been audited by your f
True / False Questions
1. The Rules portion of the AICPA Code of Professional Conduct must be followed by only
those members in private practice.
2. The AICPA Code of Professional Conduct derives its authority fro
COMPREHENSIVE VOLUME-CHAPTER 8-DEPRECIATION, COST RECOVERY, AMORTIZATION, AND
DEPLETION 3 copy Key
Property which is classified as personalty may be depreciated. TRUE
The basis of cost recovery property must be reduced by at least the cost recovery
Review for Exam #3
Name: _ Date: _
 Which of the following documents provides the most persuasive evidence about the
existence of a receivable?
A. A credit approval document supported by the customers audited financial statements.
B. A copy of a sales
Auditing Review Questions
1. Which of the following statements best describes the distinction between the auditors
responsibilities and managements responsibilities?
a. Management has responsibility for maintaining and adopting sound accounting
COMPREHENSIVE VOLUME-CHAPTER 11-INVESTOR LOSSES 3 copy Key
Sherri owns an interest in a business that is not a passive activity and in which she has $20,000 at
risk. If the business incurs a loss from operations during the year and her share of the los
Fall 2007, Test II, Multiple Choice
Identify the choice that best completes the statement or answers the question.
1. Alice purchased an office condominium on September 20, 2007, for $200,000. On October 10, she purchased
(a.) State why the audit of fair values is often difficult:
The audit of fair values can be difficult because the values are typically determined by
theories and assumptions, which can be biased. Information available to management to
The Role of the Public Accountant in the American Economy
True / False Questions
1. Independent audits of today place more emphasis on sampling than did the audits of
the 19th century.
2. The American Institute of Certified Public Ac
a. Systematic inventory
1. Observe physical count of inventory at all locations
2. Perform analytical procedures for select locations. Compare to ratios
of locations not visited and industry average.
Confirmation 5: I would trace the reported payments to the cash records. If the payment was posted to the
wrong account, then an adjusting journal entry must be made. The audited value of the account would
then have a zero balance.
Weakness: The head usher counts the offering in the church office following each service. He
then places the offering and a notation of the amount counted in the church safe.
Recommended improvement: One of the ushers should be in the room with
Sales may be recorded at
Generalized EvidenceGathering Audit
Verify sales amount to
receivables for doubtful
accounts and verify
with sales order
3b. Describe any organizational changes that would improve internal control.
Currently the accounts receivable clerk reports to the credit manager. The AR clerk should report
to the controller, because the credit manager may encourage the clerk
Homework 2. Page 59 #2-31
Casa Royale, Inc., a nonpublic company, retained Ying and Company CPA to perform an audit of the financial
statements for the current year. Howard Smythe, the partner in charge of the audit, drafted the following unmodi
Summary of Topics
The Foreign Corrupt Practices Act of 1977
*Internal control definition
*The five components of internal control
Enterprise risk management (FYI)
How to document clients internal control and