Auditing - Substantive tests and tests for fraud

18 . An unenlightened management can increase the probability of fraud in the company by A) Diversifying authority throughout divisions and subsidiaries in the organization. B) Measuring performance and awarding bonuses based on short-term operating results. C) Giving employees performance feedback that considers positi ...continues

Auditing - Audit Reporting and Required Communications

32. After the fieldwork is completed, a partner of the CPA firm who has not been involved in the audit performs a second-partner documentation review. This second review usually focuses on A) The fair presentation of the financial statements in conformity with GAAP. B) Irregularities involving the client's management and ...continues

Related Entity Transactions

It is common for an entity to have transactions with related entities—some of which are fully owned, some of which share common ownership, but are not otherwise related, and others where ownership is small but there is control. Required: a. Define related entity transactions and describe the appropriate accounting for relat ...continues

Audit Programs: standardized for an industry?

Should an audit firm use the same audit program for all companies in the same industries?

25 Accounting Multiple Choice Questions

1. How does an organization best control the realization of receivables? a. Matching sales orders, shipping documents and invoices. b. Establishing policies and procedures for the credit manager. c. Reconciling the aged receivable total to the general ledger. d. Periodically lapping receivables. 2. Sales contracts exami ...continues

Auditing

1. What would you consider to be important controls over cash at your organization? 2. Given the increased emphasis on corporate fraud, should auditors be required to look aggressively for fraud factors like collusion, circumvention and management override? Why or why not?

Auditing

1. Access the Journal of Accountancy article by Michael Ramos “Evaluate the Control Environment” from October 19, 2004. Hint: You can find this article in the eRosource Internet article section. Situation: You are a senior auditor for a Big 4 audit firm and you have been assigned to a new internal client. It is a US based c ...continues

Departures from GAAP: audit opinions are presented in good form for a qualified opinion and then an adverse opinion. Rule 203 is discussed including the application to Graham Company.

On January 1, Graham Company purchased land (the site of a new building) for $100,000. Soon thereafter, the Highway Department announced a new feeder roadway route that would run alongside the site. The effect was a dramatic increase in local property values. Nearby comparable land sold for $700,000 in December of the current ye ...continues

Fairness and Professionalism in the relationships between auditors and their clients.

In a 1988 article, Arthur Wyatt, a former member of the FASB, stated: Practicing professionals should place the public interest above the interests of clients, particularly when participating in a process designed to develop standards expected to achieve fair presentation. Granted that the increasingly detailed nature of FAS ...continues

Auditing - Multiple Choice Questions

1. Which of the following pairs of accounts would an auditor most likely analyze on the same audit documentation? A) Notes receivable and interest income. B) Accrued interest receivable and accrued interest payable. C) Notes payable and notes receivable. D) Interest income and interest expense. 2. Reference in ...continues