1. Cash disbursements are authorized by
A. Purchase orders
C. Receiving reports
2. For the copy of the purchase order that goes to the receiving department, it is best to
A. Leave off the description of the g
An audit team's responsibility would not include
A. Designing client's internal controls.
Documenting an understanding of a client's
Communicating internal control deficiencies.
1. Control risk is
a . The probability that a material misstatement could not be prevented or detected by the entity's
policies and procedures
b . The probability that a material misstatement could occur and not be det
1. The concept of materiality is not used by auditors as a guide to
planning the audit program.
B. evaluation of the evidence.
C. application of general standards.
D. making decisions about the audit report.
2. Physical observation
1. Roll-forward work normally occurs between the _ and the _.
A. Beginning of the year under audit; audit report release date
B. End of the year under audit; audit completion date
C. Beginning of the year under audit; end of the year
1. Before accepting an engagement to audit a new client, an auditor is required to
A. Make inquiries of the predecessor auditor after obtaining the consent of the prospective client
B. Obtain the prospective client's signature to the
1. When auditing financial statements and finding indications of a possible misappropriation of assets,
independent auditors should
A. Investigate fully to determine the total amount of the misappropriation
B. Determine which account
1. Management fraud generally refers to
A. Unintentional mistakes.
*C. Intentional distortions of financial statements.
D. Violations of GAAS.
2. The major emphasis in GAAS related to consideration of
fraud in a
1. When confirming accounts payable, emphasis should be
put on what kind of accounts?
A. Accounts with small or zero balances
B. All accounts should be equally emphasized
C. Accounts with large balances
D. Accounts listed in the a
1. The typical assertions related to investments and related accounts would not include the assertion that
A. Capitalized intangible costs relate to intangibles acquired in exchange transactions
B. Amortization is properly calculate
PRODUCTION CYCLE ACTIVITIES & AUDIT EVIDENCE
Job is to develop sales forecast
PRODUCTION DPT - mfg
PURCHASING - retail
Job is authorize production
Uses sales forecast to develop a production plan and a
FINANCING CYCLE (getting the money)
Objective is separation of duties
(separate the authorization, custody and record keeping functions
CFO / TREASURER
Develops Capital Budget
Identifies financing requirement
STATEMENT IMPACT OF INVENTORY ERRORS
A. Correct Information
B. Incorrect Information
- inventory error in ITALICS
(1) Overstate In
LOWER OF COST OR MARKET
ISSUE: Retailer or Manufacturer has defective merchandise needs to value at LCM
Expected selling price
ACQUISITION & EXPENDITURE CYCLE
- ACTIVITIES & AUDIT EVIDENCE
Objective of the below process is separation of duties separate the authorization, custody, record keeping functions
Four Step Process
Buy the Item
Job is to
SUMMARY OF AUDIT PROCEDURES
LONG TERM DEBT & EQUITY
Do the items
accts exist ?
Is all debt,
AUDIT TIME LINE - AUDITOR REQUIRED ACTIONS
1 Jan YY 15 Feb YY
1 Mar YY
1 Jan XX 31 Dec XX
Facts discovered by auditor between
End of Year and Audit Completion
if Fin Stmts are
if Fin Stmts are considered fair
(use except for
Auditing and Assurance Services
Define information risk and explain how the
financial statement auditing process helps to
reduce this risk, thereby reducing the cost of
capital for a com
Save & Exit Submit
Questions 1 - 12 (of 14)
Select the best answer for each of the following.
a. Which of the following organizations can revoke the right of an individual to practice as a CPA?
1. Mary Monitor, CPA, noted that ABC Co. received goods prior to year-end that were included in physical
inventory but had not been recorded. In this case, which of the following adjustments should be made?
A. Debit Purchases/credit
Week 7 Homework Solutions
This question is based on Tom's Trailer Sales case included at the end of this assignment.
The text lists nine IT duties roles (Figure 12-2). Without adding any new employees but
including Carla, describe how you would segrega
ASSERTIONS are the criteria used to evaluate the fairness of both individual account
balances and ultimately the financial statements as a whole. There are a total of eight
assertions each assertion does not necessarily apply to every
AUDITOR EVALUATION OF INTERNAL CONTROL (pg 185-200)
PCAOB - AS # 5
Objective: conformity of financial statements to GAAP
- Three Phase Approach
Objective: effectiveness of companys internal control
system (reliability, compliance, etc) - GAAP confor
When an employee embezzles company funds from an
electric utility company for the purpose of paying
expenses of an antinuclear protest organization, the
fraudster's motive is said to be
1. Which of the following is the essential purpose of the audit
A. Detection of fraud.
B. Examination of individual transactions to certify as to their
C. Determination of whether the client's financial statemen
1. Before accepting an engagement to audit a new
client, an auditor is required to
A. Make inquiries of the predecessor auditor after
obtaining the consent of the prospective client.
B. Obtain the prospective client's signature to th
1. The role of the Public Company Accounting Oversight
Board (PCAOB) is to oversee the
A . Issuance of statements by the Financial Accounting
B . Preparation and grading of the Uniform CPA Examination
C. Peer revie
1. Which of the following is not included in the scope paragraph of the standard report on the
entity's financial statements?
A a conclusion that the financial statements are in conformity with U.S. GAAP.
B a statement that the audit
1. The sum of customers' unpaid balances that is compared to the general ledger balance comes from
A. A total of sales invoices
B. A total of shipping orders
C. The sales journal
D. The accounts receivable trial balance
2. The file t