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Question: The following questions deal with management


The following questions deal with management assertions. Choose the best response.
a. An auditor reviews aged accounts receivable to assess likelihood of collection to support management’s assertion about account balances of
(1) existence.
(2) completeness.
(3) accuracy, valuation, and allocation.
(4) rights and obligations.
b. An auditor will most likely review an entity’s periodic accounting for the numerical sequence of shipping documents to ensure all documents are included to support management’s assertion about classes of transactions of
(1) occurrence.
(2) classification.
(3) accuracy.
(4) completeness.
c. In the audit of accounts payable, an auditor’s procedures will most likely focus primarily on management’s assertion about account balances of
(1) existence.
(2) completeness.
(3) accuracy, valuation, and allocation.
(4) classification.



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> The following are specific balance-related audit objectives applied to the audit of accounts receivable (a. through i.) and management assertions about account balances (1 through 6). The list referred to in the specific balance-related audit objectives

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> The following are specific transaction-related audit objectives applied to the audit of cash disbursement transactions (a. through f.), management assertions about classes of transactions and events and related disclosures (1 through 6), and general tran

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> For the following independent situations, assume that you are the audit partner on the engagement: 1. A number of frozen yogurt stores have opened in the last few years and your client, YogurtLand, has experienced a noticeable decline in customer traffic

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> Identify some of the most important ways that the profession and society encourage CPAs to conduct themselves at a high level.

> The following (1 through 16) are the balance-related and transaction related audit objectives. Identify the specific audit objective (1 through 16) that each of the following specific audit procedures (a. through l.) satisfies in the audit of sales, ac

> There are many types of information that require assurance. Individually or in groups, identify the following types of assurance services. a. Identify three or more assurance services that are likely to be provided only by public accounting firms. b. Ide

> Publicly traded companies must electronically file a variety of forms or reports with the SEC, including the Form 10-K, which includes the audited annual financial statements. The SEC makes most of these electronic documents available on the Internet via

> The following independent scenarios describe auditor decisions made during an audit engagement. 1. Chen Li worked on the audit of American Healthcare Associations (AHA), which operates hospitals and outpatient centers in Texas and Oklahoma. Chen was assi

> The following information was obtained from several accounting and auditing enforcement releases issued by the SEC after its investigation of fraudulent financial reporting involving Just for Feet, Inc.: Just for Feet, Inc., was a national retailer of at

> The SEC Enforcement Division investigates possible violations of securities laws; recommends SEC action when appropriate, either in a federal court or before an administrative law judge; and negotiates settlements. Litigation Releases, which are descript

> James Burrow is the loan officer for the National Bank of Dallas. National has a loan of $325,000 outstanding to Regional Delivery Service, a company specializing in delivering products of all types on behalf of smaller companies. National’s collateral o

> Monterrey Corporation has an existing loan in the amount of $7 million with an annual interest rate of 6.5%. The company provides an internal company-prepared financial statement to the bank under the loan agreement. Two competing banks have offered to r

> As discussed in the chapter opening vignette and on page 9, companies are increasingly issuing reports on corporate social responsibility. Visit the Global Reporting Initiative website (www.globalreporting.org) and answer the following questions. a. What

> Visit the PCAOB’s website (www.pcaobus.org) and locate the PCAOB’s Settled Disciplinary Order against David M. Burns issued on December 19, 2017, to answer the following questions: a. What position did Burns hold within the audit firm and how long had he

> Explain how the increased use of fair value accounting might increase information risk.

> The following questions relate to the AICPA Code of Professional Conduct, which can be viewed online or downloaded in pdf format at www.aicpa.org: a. When should a member apply the conceptual framework for members in public practice? Which rule or rules

> The following questions deal with tests of controls. Choose the best response. a. To support the auditor’s initial assessment of control risk below maximum, the auditor performs procedures to determine that internal controls are operating effectively. Wh

> The following questions concern types of audit tests. Choose the best response. a. An auditor’s deci0sion either to apply analytical procedures as substantive tests or to perform substantive tests of transactions and account balances usually is determine

> The following are general questions about internal control. Choose the best response. a. Which of the following would not be considered an inherent limitation of the potential effectiveness of an entity’s internal control structure? (1) Mistakes in judgm

> The following questions concern the planning of the engagement. Select the best response. a. Analytical procedures used in planning an audit should focus on identifying (1) material weaknesses in internal control. (2) the predictability of financial dat

> The following are general questions about internal control. Choose the best response. a. Which of the following situations is not an example of an inherent limitation of internal control? (1) A programming error in the design of an automated control allo

> The following questions concern the characteristics of IT systems and their impact on internal controls. Choose the best response. a. Which of the following is an advantage of a computer-based system for transaction processing over a manual system? A com

> The following questions address fraud risk factors and the assessment of fraud risk. a. Which action regarding fraud is an activity related to performance of risk assessment procedures? (1) Document the results of procedures used to address the risk of f

> The following questions concern quality control standards. Choose the best response. a. The nature and extent of a CPA firm’s quality control policies and procedures depend on b. Which of the following is an element of a CPA firm&acir

> The following questions deal with types of audits and auditors. Choose the best response. a. Operational audits generally have been conducted by internal auditors and governmental audit agencies but may be performed by certified public accountants. A pri

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> The following questions concern unmodified opinion audit reports. Choose the best response. a. Which of the following is not a required element of a standard unmodified opinion audit report issued in accordance with AICPA auditing standards? (1) A title

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> The following questions deal with liability under the 1933 and 1934 securities acts. Choose the best response. a. Major, Major & Sharpe, CPAs, are the auditors of MacLain Technologies. In connection with the public offering of $10 million of MacLain secu

> The following questions concern CPA firms’ liability under common law. Choose the best response. a. In a common law action against an accountant, lack of privity is a viable defense if the plaintiff (1) is the client’s creditor who sues the accountant fo

> The following questions deal with auditing standards. Choose the best response. a. Which of the following best describes what is meant by U.S. auditing standards? (1) Acts to be performed by the auditor (2) Measures of the quality of the auditor’s perfor

> Identify the six organizational structures available to CPA firms. Why are most CPA firms not organized as general partnerships?

> What are the three conditions that require a departure from an unmodified opinion audit report? Give an example of each.

> When should the auditor include an explanatory paragraph in an unmodified opinion audit report?

> Distinguish between a report qualified due to a GAAP departure and one qualified due to a scope limitation.

> What are the most significant differences between the AICPA and the PCAOB standard unmodified opinion audit reports?

> What are the eight parts of a standard unmodified opinion audit report for a nonpublic entity and what is the main content provided in each part?

> Explain the rule on contingent fees. Why is this rule necessary?

> Identify the circumstances under which a CPA can disclose confidential information without client permission.

> Explain the role of the audit committee in enhancing auditor independence.

> How might the write-off of accounts receivable increase the risk of fraud related to cash receipts?

> What are the similarities and differences among the three main types of audits?

> What are the major causes of information risk? How can information risk be reduced?

> The U.S. national stock exchanges require listed companies to have an independent audit committee. Required: a. Describe an audit committee. b. What does it mean for the audit committee members to be “independent”? c. What are the typical functions perf

> The following relate to auditors’ independence: a. Why is independence so essential for auditors? b. Compare the importance of independence of CPAs with that of other professionals, such as attorneys. c. Explain the difference between independence in app

> Identify the two broad categories of management assertions.

> The following are independent situations for which you will recommend an appropriate audit report: 1. Subsequent to the date of the financial statements as part of his post-balance sheet date audit procedures, a CPA learned that a recent fire caused heav

> Review the information in Table 2-1 on page 25 and discuss the following: a. For the largest 10 firms listed in the table, how many firms generate the largest percentage of their revenue from consulting? Discuss why some firms may have larger consulting

> For each engagement described below, indicate whether the engagement is likely to be conducted under international auditing standards, AICPA audit in standards, or PCAOB auditing standards. a. An audit of a public company headquartered in the U.S. listed

> You have been asked to make a presentation in your International Business class about how globalization is impacting the auditing profession. In preparation, you met with your auditing professor and discussed these questions: a. What organization is resp

> The IAASB recently revised its standards related to audit reporting. ISA 700 (Revised), Forming an Opinion and Reporting on Financial Statements, requires the auditor’s report to include the following paragraphs under the headings “Basis for Opinion” and

> The PCAOB’s recently revised auditor reporting standard includes a requirement for the auditor to communicate critical audit matters. Critical audit matters include those matters during the audit that involved difficult, subjective, or complex auditor ju

> PCAOB Rule 3211, Auditor Reporting of Certain Audit Participants, requires that an audit firm file a form, referred to as Form AP, for each initial issuance of an audit report. On Form AP, the audit firm discloses the name of each audit engagement partne

> Regulators are taking advantage of advances in technology to fulfill their oversight responsibilities. Visit the website of the Securities and Exchange Commission (SEC) (www.sec.gov) to locate the speech given at the OpRisk Nort America 2017 Conference b

> This problem is based on the JA Tires data that was first introduced in problem 6-35. If you have not already accessed the data, it can be downloaded from the textbook website. As part of risk assessment procedures, you have been asked to perform some pr

> In Part IV of this case study, you obtained an understanding of internal control and made an initial assessment of control risk for each transaction-related audit objective for acquisition and cash disbursement transactions. The purpose of Part V is to c

> How did the Sarbanes–Oxley Act of 2002 increase criminal liability for auditors?

> Below are 10 independent risk factors: 1. The client is one of the industry’s largest based on its size and market share. 2. The company is publicly traded. 3. The client fails to reconcile bank accounts to recorded cash balances. 4. The audit program om

> Both transaction-related and balance-related audit objectives include objectives related to presentation and disclosure. Visit the website of the United States Securities and Exchange Commission (SEC) and locate the Accounting and Auditing Enforcement Re

2.99

See Answer