Internal Controls—Office Service Client

5-61 (Internal Controls—Office Service Client) Brown Company provides the following office support services for more than 100 small clients: 1. Supplying temporary personnel 2. Providing monthly bookkeeping services 3. Designing and printing small brochures 4. Copying and reproduction services 5. Preparing tax reports ...continues

Sampling

Why do auditors find it necessary to use sampling? What are some of the different types of sampling methods that are available to the auditor? What are the risks associated with using sampling? How will these risks affect the audit conclusion?

Population

What is the importance of defining the population when performing audit procedures? How will this affect the sample size? How will incorrectly defining the population affect the sampling unit?

E-business, E-commerce

Please name different types of audit tests, other than computer audit tests that should be performed to satisfy an auditor that major e-business and e-commerce transactions are handled properly.

Basic Sampling

E.54 Basic Sampling: Comprehensive. Reagan is considering opening a multipurpose hardware and lawn store in Anytown, USA. Based on his knowledge of the industry, he feels that if the average household income is greater than $35,000, the store will ultimately be successful. He was planning on attempting a census of the income lev ...continues

Analytical

List two analytical procedures that can test accounts payable. What potential errors or fraud can be identified by each procedure?

Misstatements and Controls

*10-59 (Misstatements and Controls) Field, CPA, is auditing the financial statements of Miller Mailorder, Inc. (MMI) for the year ended January 31, 2006. Field has compiled a list of possible errors and fraud that may result in the misstatement of MMI's financial statements, and a corresponding list of internal controls that, i ...continues

Testing Controls

10-63 (Testing Controls) Following is a list of controls typically implemented in the processing of sales transactions. Required a. For each control identified, briefly indicate the financial misstatement that could occur if the control is not implemented effectively. b. Identify an audit procedure to test for effectiveness ...continues

Strang Corporation

During the year, Strang Corporation began to encounter cash flow difficulties, and a cursory review by management revealed receivable collection problems. Strang’s management engaged Elaine Stanley, CPA, to perform a special investigation. Stanley studied the billing and collection cycle and noted the following. The accountin ...continues

Audit reports

1. What are the different types of audit reports and when should each be used? 2. In what types of situations would an auditor be allowed to issue an unqualified audit report? 3. To what extent is the auditor liable for misstatements in the financial statements of the audited company.