...NINJA CPA REVIEW® NINJA Notes 2015 Auditing & Attestation Table of Contents The N.I.N.J.A. Framework I. Engagement Planning 8 II. Internal Control 25 III. Auditing & IT 36 IV. Evidence & Risk 42 V. Audit Reports 57 VI. Audit Sampling 66 VII. Professional Responsibilities 77 VIII. International Auditing 84 2 The N.I.N.J.A. Framework NAIL THE CONCEPTS Watch your CPA Review videos first – before working any assigned homework questions. The CPA Review industry says to watch a section of CPA Review video and then work the accompanying MCQs. This perspective stems from the old-school approach to the paper and pencil exam where you had to sit in a live classroom and learn from an instructor on weekends. Today, there is a smarter way to study. You don’t have to go to a weekend live course. You can fire up the laptop on a Tuesday morning and knock out two hours of material before you even brush your teeth. If you work MCQs in week one over your week one topic, guess what? You will work them again in week 5 or 6 when you review because you will forget what you learned. If you watch a video in week one and score an 85 on the corresponding MCQs, will you be able to score an 85 four weeks later? Not likely. You will need to work them again anyway and it’s not a smart use of study time. Instead, let the N.I.N.J.A. Framework guide you. INTENSE NOTES Repeat after me: “PUT THE HIGHLIGHTER DOWN.” Which method do you think will...
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...ACC305 – Auditing and Professional Practice Unit Outline – 2015 Unit Coordinator: Dr Chun Jiang (PhD, FCPA) 1|P age Introduction Welcome to Elite Education and ACC305 – Auditing and Professional Practice. This document provides you with information relevant to successful completion of this unit; including schedule of lecture topics, prescribed texts, assessment policies, assessment tasks, examinations, academic and administrative contacts and online learning support facilities. Student Handbook and Administration Office The Elite Student Handbook provides valuable general information for students and a printed copy will be provided to you. In addition, the Institute staff are available to assist you personally during office hours. Office Contact Details: Elite Education Institute 1 James Place, North Sydney, NSW 2060 Tel: 02 9212 2120 Unit Overview This unit introduces the major conceptual and technical aspects of auditing and assurance services. Accordingly, the unit provides critical insights into the auditor's legal and societal role, the underlying conceptual theory of auditing, professional auditing techniques, and contemporary auditing issues. The core theme of this unit is the external audit of corporations, from initial planning to final reporting in the context of a professional environment. Assumed Knowledge Prerequisite: ACC101 – Fundamentals of Accounting I, ACC102 – Fundamentals of Accounting II, and ACC204 – Advanced...
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...ACC30010 Auditing Unit Revision 1 S1, 2015 Exam Preparation: In presenting for the final exam it is expected you have: Read the set chapters in the textbook Read the lecture slides Done all of the set tutorial work Minimise what you are memorising – far better to understand: There will be some things you will need to commit to memory. There needs to be structure to your exam preparation: Topic summaries – not past exams! Read 2 as many auditing questions as you can. S1, 2015 Exam Information: Minimum Requirements to pass this Unit of Study: You must obtain a mark of at least 45% on the final examination to be eligible for a pass in this unit. This is non-negotiable!!!! 3 S1, 2015 Exam Information: Exam comprises 2 Parts: Part A is MCQ = 50 marks Part B are Short Answer Questions = 50 marks Total 100 marks All topics are examinable except: Introduction to Auditing (lecture 1) Ethics, Independence and Corporate Governance (lecture 4a) Sampling (lecture 10) NOTE: This information does not apply to any subsequent exams, such as the ‘special’ exams (SPX) or the ‘Last to Complete’ exams (LTC) 4 Statistical Overview of Unit - Averages: Mid-Semester Test: 8.9 / 15 Presentations: 7.7 / 10 (77%) Essay: 8.9 / 15 (SFS now accessible through your My.Swinburne account) 5 (59%) (59%) Nature and Objectives of Auditing 6 Elements of an...
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...AUDIT TUTORIAL 5 MCQ 1. D 2. B 3. A 4. D SHORT QUESTION 1) The benefits that auditor derives from planning audits are * Helping the auditor to devote appropriate attention to important areas of the audit. * Helping the auditor identify and resolve potential problems on a timely basis. * Helping the auditor properly organize and manage the audit engagement so that it is performed in an effective and efficient manner. * Assisting in the selection of engagement team members with appropriate levels of capabilities and competence to respond to anticipated risks, and the proper assignment of work to them. * Facilitating the direction and supervision of engagement team members and the review of their work. * Assisting, where applicable, in coordination of work done by auditors of components and experts. (Slide 4) 2) The auditor shall obtain an understanding of the following: (a) Relevant industry, regulatory, and other external factors including the applicable financial reporting framework. (b) The nature of the entity, including: (i) its operations; (ii) its ownership and governance structures; (iii) the types of investments that the entity is making and plans to make, including investments in special-purpose entities; and (iv) the way that the entity...
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...1.) | 1987 | 1986 | 1985 | 1984 | Current Ratio | 2.41 | 1.40 | 1.56 | .93 | Quick Ratio | 1.40 | .60 | .77 | .15 | Debt to Assets | .68 | .66 | .64 | .83 | Debt to Equity | 2.16 | 1.98 | 1.75 | 4.88 | Accounts Receivable Turnover | 32.5 | 116.78 | 49.75 | 52.72 | Inventory Turnover | 3.23 | 4.38 | 5.14 | 5.88 | Shown above are some of the key ratios for Crazy Eddie during the period 1984-1987. Some of the red flags these ratios reveal include the steady decline of inventory turnover rates from 1984-1987 which could indicate lost sales, excess inventory, or ineffective buying. Another red flag is the accounts receivable turnover figures. The drop from 116.78 in 1986 to 32.5 in 1987 is most likely a result of the poor credit policies Crazy Eddie had in place for its customers. 2.) Several audit procedures could have led to the detection of some of the accounting irregularities involved in the financial statements of Crazy Eddie. For (a) the falsification of inventory count sheets, the auditors could have visited more than one site of a Crazy Eddie store and performed full physical counts of inventory that didn’t allow Eddie Antar to stock up one location with inventory which he knew would be audited. Also, the auditors could have checked the inventory that was in place with the amounts on the inventory sheets and obtain proper documentation from vendors and confirming with them the proper inventory that was ordered. With regards to (b) the bogus debit memos...
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...Financial Statement Audit 8. Financial Statement Audit 3. Compliance 9. Financial Statement Audit 4. compliance 10. Compliance 5. Operational 11. Operational 6. Financial Statement Audit 12. Compliance CHAPTER 2 MC 2-15 A) 2 B) 1 2-16 A) 3 B) 2 C) 1 2-17 A) 2 B) 2 C) 3 Simulation Questions 2-19 A) engagement performance F) leadership responsibilities B) monitoring G) Monitoring C) Engagement Performance H) acceptance & continuation of clients D) Leadership Responsibilities I) Leadership Responsibilities E) Relevant and ethical requirements J) Human Resources 2-22 A) U.S. generally accepted auditing standards B) International Auditing Standards C) PCAOB D) PCAOB E) U.S. generally accepted auditing standards F) U.S. generally accepted auditing standards G) PCAOB H)...
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...Audit procedures which an auditor should perform when planning attendance at a Company stock take. 1.Review and planning: The auditor must review prior year’s working papers to enable himself to familiarize with the nature volume and location of inventories. Consideration must be made with regard to the controlling and recording procedures over inventory and the timing of the count. 2.Problem identification and reliance: The must identify problem areas in relation to the system of internal control and decide whether reliance can be placed on internal auditors. This also assists in risk assessment and timing audit procedures. 3.Risk and materiality: Assessment of inherent, control and detection risks is necessary for a comprehensive stocktaking audit programme and this will assist the auditor to establish materiality levels before undertaking the stock count. 4.Inventory held by third parties: Arrangement must be made to ensures that third party holding inventories confirms .Depending on materiality of the inventory held the auditor should also consider the integrity and independence of the third party and whether it is necessary to arrange for other auditors to observe the count or whether it is sufficient to obtain another auditor’s report on the adequacy of the third party’s systems or merely to inspect relevant documentation held at client place. 5.Expert assistance: Assessment must be made by the auditor regarding the nature of the...
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...Audit Term: Fall 2013 COURSE: AP/ADMS 4552 3.0 Sections A and B Information Systems Audit Schedule First day of class: Section A: Wednesday, September 11, 2013 11:30 AM – 2:30 PM, Location: HNE 030 Section B: Thursday, September 12, 2013 7:00 PM – 10:00 PM, Location: HNE 032 REQUIRED COURSE TEXT/READINGS: • Hall, James A., (2011), Information Technology Auditing, 3e, Mason: South-Western Cengage Learning (Referred to as “IT Audit Text” in the Readings List for each class) • Additional material as listed in the course outline. This includes articles referenced by links, readings from books that were required for prerequisite courses, cases and assignment details posted on our web site. • CICA Assurance Handbook, as available online from York University library, (referred to as “Handbook” in the Readings List for each class). Selected readings are from: [Note this book is available on reserve at the business library in the Schulich building if you do not have a copy.] • Arens, A., R. J. Elder, M. S. Beasley and I. B. Splettstoesser-Hogeterp. 2011. Auditing: The Art and Science of Assurance Engagements, Canadian 11th Edition, Pearson Prentice Hall: Toronto. (Referred to as “Audit Text” in the Readings List) References for the 12th Canadian edition of the Audit text (as an alternative to the 11th edition) will be provided separately as a document on the course web site. Warnings: Photocopying more than 10% of a textbook...
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...Adelphia Communications Corporation was a cable company, whose owners, John Rigas and his son Timothy,” were charged with bank fraud, securities fraud, and conspiracy.” (Reference #4) They were charged with all fifteen accounts of securities fraud. Another son of his was acquitted, as well as the former treasurer, Michael Mulcahey. “John and Timothy now face 30 years in prison because of the bank fraud charge.” (Reference #4) “They were charged with hiding over $2.3 billion dollars’ worth of debt in the company,” (Reference #4) as well as stealing from there investors. John became so greedy with the money he was taking, that his son became worried about it and tried to limit him to only taking out one million a month. The prosecution had two witnesses that they used in order to bring down the Rigas’, and they were Adelphia executives, James Brown and Karen Crosniak. They testified and tried to say that they weren’t aware of what they were doing, but ignorance of the law doesn’t mean you can get away with what you do. The effects of what they did have impacted the company so much that they had to move to a new location, and they operate under bankruptcy protection. There are many ethical issues that pertain to this issue, as well as many laws that were broken. First, what some call “creative accounting”, this is when a company tries to do something with their accounting reports to make the company look very profitable so that they can attract new investors. This is...
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...The city of Louisville-Jefferson County Metro Government, Kentucky’s fiscal year ended June 30, 2008. This is the sixth annual report issued for the consolidated government since the merger of the City of Louisville and Jefferson County governments on January 6, 2003. An elected Mayor governs the Metro Government and the Metro Council composed of twenty-six council members elected from each of the twenty-six council districts. All executive and administrative power of the consolidated local government is vested in the office of Mayor. Metro Government provides some of the following services: public protection and safety, streets and roads, planning and zoning, public improvements and community development, sanitation, public health and social services, parks, and other administrative services. The local government has achieved a prestigious award for four consecutive years; the Certificate of Achievement is awarded to government that publish an easily readable efficient organized CAFR that satisfied both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is valid for one year only. The 2008 CAFR reflects that Metro Government continues to be financially strong and stable in a local economy. Metro Government is required to undergo annual single audit in conformity with the provision of the single Audit Act of 1984 and the Single Audit Act Amendments of 1996 and the US office of Management and Budget Circular A-133...
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...EXAM COVER SHEET NOTE: This exam paper may be RETAINED by the student EXAMINATION DETAILS Course Code: Course Description: Date of exam: ACCT1111 Auditing and Assurance Services 28/10/2008 Start time of exam: 9:15 AM Duration of exam: 3hr 15min Total number of pages (incl. this cover sheet) 8 ALLOWABLE MATERIALS AND INSTRUCTIONS TO CANDIDATES 1. Write your full name and student number on each examination booklet together with the number of examination books used. Students must not write during reading time. 2. This is a CLOSED BOOK Exam. 3. Commence each question on a new page. Carry out the instructions on the front cover of the examination script book and the front of this exam paper. 4. Non text storing calculators are allowed. 5. Bi-lingual dictionaries are not allowed. 6. No electronic devices such as mobile phones, laptop computers, electronic dictionaries etc. are permitted to be taken into the exam room. 7. The examination paper contains the following questions: Section A ONE essay questions 25 marks Section B TWO short answer questions 15 marks Section C FIVE application questions 60 marks Totalling 100 marks 8. To obtain a pass in this course, candidates must achieve at least 50 marks overall and obtain at least 50% of the total marks on this examination paper. 9. Attempt ALL questions and all parts of questions. 10. No dictionaries are allowed in this examination unless duly authorised as a special consideration by the Course Coordinator...
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...The impact of ICT on accounting practice in Nigeria CHAPTER ONE Introduction 1.1 Background of the study In the recent past centuries, before the inception of Information and Communications Technology (ICT), the accountants of an organization were using a socially acceptable behavioural method of reporting accounting and economic reports, carried out during accounting year ends, the preparation of accounting records, book such as the profit and loss account, the balance sheet, cash book, cash flow statement, income and expenditure accounts. The application of Information and Communication Technology (ICT), on accounting practice in Nigeria has become a subject of fundamental importance and concerns to all business enterprise and indeed a prerequisite for local and international competitiveness. It is obvious that the way accountants plan and take decision on what and how to provide their service in the accounting profession has been affected immensely by Information and Communication Technology (ICT). This has continued to change the manner in which accounting practice and their corporate relationships are organized worldwide and the variety of innovative device available to improve and facilitate the speed and quality service delivery. It is obvious that the biggest impact of Information and Communication Technology (ICT) has been made on accounting; and it is the ability of companies to develop and use computerized system to...
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...Protection of outside investors relies on the detection and punishment of managers and controlling shareholders for resource diversion. In this process, auditors represent the mechanism whereby detection of diversion occurs. The critical role of auditing is to detect expropriations by insiders and to deter such behavior. Without detection, the degree of investor protection is significantly weakened. If law enforcement is not triggered, neither strictness of laws nor stringent enforcement matters; therefore, insiders have the incentive to retain auditors to provide outside investors with assurance that expropriations are limited when raising external capital (Jensen and Meckling, 1976). Some financial instruments and transactions and very complex with values that can only be estimated; that’s why in most cases, auditors may rely on the internal controls. The Internal control system plays a key role in the success of the accounting system: it protects the business from abuse and fraud, ensures that the information received is accurate and timely, and assures that all regulatory requirements are being met. The internal control system is especially critical for private fund investors. Security Exchange Commission (SEC) mandates internal controls for publically traded companies while hedge funds and other private equity funds are exempts from the regulations that other investment vehicles face. Although better internal controls should decrease the likehood of fraud and the...
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...of AICPA and SEC based on rules of independence, if pre-approved it is okay. b. Based on SOX and SEC rules internal auditing of a public company is prohibited. c. Prohibited under SOX and SEC d. AICPA rules of professional conduct, if pre-approved it is okay. e. With pre-approval it is allowed. Normally prohibited under SOX and SEC. f. According to the AICPA, this is allowed as long as the three requirements are met. 4-21 a. Violation of independence. It is not acceptable to provide management advisory services to a client you also perform bookkeeping and auditing services for. b. He does not take part in the audit. There is no violation. c. Violation of general standards d. Violation of integrity and objectivity e. Violation of Form of organization and name. f. no violation g. violation of confidentiality h. violation of acts discreditable. 4-22 a. indirect financial interest violation b. integrity and objectivity violation c. not a violation d. violation of independence e. unpaid fees violation of Rule 101 f. violation of independence g. not a violation h. violation of integrity and objectivity i. ethical dilemma and violation of Rule 203 Accounting Principles j. Violation- Contingent fees 5-17 a. (3) b. (2) c. (1) d. (2) 5-19 a. Yost and Co. should use the defenses of meeting auditing standards and contributory negligence. b. There are two defenses Yost and Co. should use in a suit by First City...
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...Micro Enhancement International, Inc. v. Coopers & Lybrand LLP 40 P. 3d 1206 (Wash. App. 2002) Facts of the Case: Micro Enhancement International (MEI) was a software development company that was on the about to have an IPO. They hired Coopers and Lybrand as the auditor. The IPO for MEI was delayed because Coopers and Lybrand were resisting some of MEI’s recognized revenue and were threating to add a “going concern” to the audit. In the end Coopers and Lybrand allowed MEI to recognize the revenue and took away the “going concern” qualification. By the time the issue was settled MEI had lost the underwriter for the IPO and then went bankrupt shortly after. MEI sued Coopers and Lybrand for multiple things, but then wanted to add a breach of fiduciary duty. MEI’s CEO Staples said that, “he trusted Coopers and that Coopers had agreed to do the audit to do the Audit and to serve as MEI’s business advisor…” The judge denied this request and MEI appealed. Procedural History: The judge denied MEI’s request to add the breach of fiduciary duty so MEI appealed. Legal Issue: The issue in this case is the establishment of Cooper and Lybrand’s fiduciary duty to MEI. If this duty is established then MEI will get to add that breach, however, if not, the judge’s original ruling will be affirmed. Reasoning/Analysis: The first thing is to understand what causes a fiduciary duty. There are two types, Matter of Law (between a attorney and client, physicians and patients, partners...
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