Ch. 1 Outline
A. What service do auditors perform?
1. Assurance service - the broad range of information enhancement services that are
provided by certified public accountants (CPAs). The accountant must be
independent to perform these services.
a. Two ty
Chapter 12 - Inventories and Cost of Goods Sold
Inventories and Cost of Goods Sold
12. Which of the following is not true relating to the auditors' observation of the client's
A. The auditors should evaluate the client's pla
Chapter 11 - Accounts Receivable, Notes Receivable, and Revenue
Accounts Receivable, Notes Receivable, and Revenue
13. Your client performed the physical count of inventory as of November 30, one month
prior to year-end. Subsequently, your clie
Chapter 10 - Cash and Financial Investments
Cash and Financial Investments
15. An internal control questionnaire indicates that an approved receiving report is required to
accompany every check request for payment of merchandise. Which of the f
Ch. 2 Outline
A. Auditing Standards
a. Two sets of auditing standards in the U.S.
i. AICPA, with the Auditing Standards Board, for nonpublic companies
ii. PCAOB for public companies
b. A third standard is the International Auditing Standards with differin
Chapter 2 Partial Solutions ACG4651 Summer 2017
Generally accepted accounting principles have major authoritative support, such as approval by the
Governmental Accounting Standards Board (GASB) or the Financial Accounting Standards Board (FASB).
June 10, 2017
Chapter 10 Homework
1. Identify the sections of the standard audit report for a nonpublic company.
The section headings of a standard audit report for a nonpublic company include
the introductory section
June 4, 2017
Chapter 4 Homework
State the purpose and nature of an engagement letter.
An engagement letter establishes the terms of the audit engagement for the auditor
and the client. The letter includes the objective and scope o
May 28, 2017
Chapter 2 Homework
2. What is the difference between generally accepted accounting principles (GAAP) and
AICPA generally accepted auditing standards (GAAS)?
Generally accepted auditing standards issued by the AICPA are t
May 19, 2017
Chapter 1 Homework
1. In late 2001 and 2002, the accounting profession faced a crisis of credibility. Describe
the events that led up to this crisis.
Two major public accounting scandals occurred in 2001. The Enron Scand
May 28, 2017
Chapter 3 Homework
8. As part of the verification of accounts receivable as of the balance sheet date, the auditors
might inspect copies of sale invoices. Similarly, as part of the verification of accounts
payable, the a
June 4, 2017
Chapter 5 Homework
2. Identify the five components of an organizations internal control.
The five components of an organizations internal control include the control
environment, the risk assessment process, control acti
June 10, 2017
Chapter 6 Homework
1. Define and differentiate between, Nonstatistical (judgmental) sampling and statistical
Nonstatistical or judgment sampling is down when auditors estimate sampling
risk by u
To determine that the clients accounting procedures are operating effectively, the auditors
perform tests of accuracy of the clients journals and ledgers. The auditors must manually
determine the documents are accurately entered to the journals
Substantiation of the figure for inventories is an especially challenging task because of the
variety of acceptable methods of valuation. In addition, the variety of materials found in
inventories calls for considerable experience and
Substantial doubt about an entity's ability to continue as a going concern exists
Principles of accounting have not been consistently applied in relation to the prior year.
The auditors wish to emphasize some matter in the financial
Management of the privately held company may be motivated to understate assets so as to
minimize income taxes.
Bank accounts may not be recorded as to make possible unrecorded, illegal payments.
Management may wish to manage earnings
A sales order is a translation of the terms of the customer's order into a set of specific instruction
for the guidance of various divisions including the credit, finished goods stores, shipping, billing
and accounts receivable uni
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GAAP is containing accounting standards to prepare financial statements by CPA, where, GAAS,
on the other hand, provides set of standards for auditors by which the prepared financial
statements are comply with existing accounting ru
Audit procedures depend on lots of different factors such as the risk of material misstatement,
internal control, estimates of materiality, nature of the accounting records, and special objectives
of the engagement. Therefore, separat
Assurance services are the broad range of information enhancement services that provided by
CPA. It consists two types of services: those that increase the reliability of information and those
that involve putting information in a f
The organizational structure of an entity should separate responsibilities for authorization of
transactions, record keeping for transactions, and custody of assets. A well-designed
organizational structure provides a basis for planni
Related party refers to individuals or entities who may have dealing with the client in which one
party is significantly influenced by the other such that it may not pursue its separate interests.
Examples are: officers, directors, principal
Basic to audit sampling is sampling risk - the risk that the auditors conclusion based on the
sample might be different from the conclusion they would reach if the examined every item in
the entire population. Auditors may also draw e
Auditing Hw Ch 2
2. GAAP uses the 10 generally accepted auditing standards used for public companies, is what
companies use to prepare financial statements. GAAS uses a set of principles that provide a
summary of information, is the standards that an audi
Auditing Hw Ch 1
2. Define assurance services. What are the two distinct types?
Assurance services is professional services that enhance the quality of information or its
context, for decision makers, many assurance services involve some form of attestati