Premium Essay

Audting

In: Business and Management

Submitted By tianhua627
Words 14320
Pages 58
Solutions for C hapter 7 A udit E vidence: A F r amewor k
Review Questions: 7-1. Audit evidence is all the information used by auditors in arriving at the conclusions on which the audit opinion is based. The basic sources of evidence are knowledge of the business and industry, analytical procedures, tests of controls, and direct tests of account balances and transactions. The auditor must decide how much evidence is needed (extent), what kind of evidence is needed (nature), and when to gather the evidence (timing). The assertions form the framework for gathering sufficient, competent audit evidence as required by the professional standards. The assertions tie into generally accepted accounting principles in that those assertions are also embodied in GAAP. The five main assertions are defined as: Existence/occurrence. The assets, liabilities, and equity interests exist and all transactions reflected in the financial statements actually occurred. Completeness. All assets, liabilities, equity interests, and transactions that should have been recorded have been recorded, i.e., nothing is left out of the financial statements. Rights/obligations. The entity holds or controls the legal ownership to assets, and liabilities are legally owed by the entity. Valuation/allocation. Assets, liabilities, and equity interests are included in the financial statements at appropriate amounts and any resulting valuation or allocation adjustments are appropriately recorded. Presentation/disclosure. Assets, liabilities, and equity interests are appropriately classified on the financial statements, and are adequately described in the footnotes to the financial statements. 7-4. Valuation is usually one of the most important assertions to address in most audits. The intent of this question is to have the students think about the detail required by GAAP in forming specific assertions to be…...

Similar Documents

Free Essay

Dr Manger

...Auditing and assurance services 13e. By: alvin a arens , test bank Auditing and assurance services 13e. The isbn # 978-0-13-608473-0, solutions manual Auditing and assurance services 3e by timothy louwers, robert ramsay, david sinason, and jerry strawser test bank Auditing and assurance services an intergrated approach and acl software, 12e by alvin arens randal j. Elder, ark beasley, solutions manual auditing and assurance services in australia 4e by gay test bank Auditing and assurance services: a systematic approach, 6th edition, messier, glover, prawitt test bank Auditing cases - mark beasley (4th ed) solutions manual Auditing cases an interactive learning approach 4e beasley solutions manual Audting and assurance services 13th edition (authors: arens, elder, beasley) solutions manual Audting and assurance services 13th edition (authors: arens, elder, beasley) test bank Automotive fuel systems and emission controls package - warren m. Farnell (5th ed) (isbn 0131407813) test bank bank management & financial services 7e by rose test bank Bank management & financial services 8e peter s. Ross solutions manual Bank management 7e by peter s rose test bank Bank management 7e peter s. Rose isolutions manual + test bank Basic business statistics 11e mark l berenson david m. Levine test bank Basic college mathematics - elayn martin-gay (3rd ed) test bank Basic college mathematics - elayn martin-gay (3rd ed) solutions manual Organizational Theory, Design, and Change Jones 6th......

Words: 29834 - Pages: 120

Premium Essay

Hmr Practice of Bank

...what is required in other 3-credit academic courses. Working on a research project requires some original thinking on the part of the student. Students merely repeating from textbooks and a few articles have not been successful in obtaining a good grade in this course. First, students are required to complete a detailed review of their internship experience that covers 4 to 6 pages (double spaced, 12-point Time New Roman font). The report should address all questions required above for the 1 credit course. In addition, each student registered in Acc 5200 is expected to undertake a major research project. The selection of a topic is totally the responsibility of the student. The topic is to be related to some aspect of accounting or audting. Often students choose topics relevant to their position or employer. A 6 page outline of the proposed research MUST be approved by the internship coordinator prior to a student being allowed to register for Acc 5200. We suggest a student review article(s) from such business publications as the Wall Street Journal, Business Week, Barron’s, Fortune, Financial Times or SEC Enforcement actions. This will give students some insight into the scope of what is required. The research topic should demonstrate that the student has investigated a question and provided some insight(s) on how the issue could be resolved. During the course of the term the student is expected to provide timely updates on the progress of the research. At least......

Words: 1136 - Pages: 5

Free Essay

Effect of Qualifying Exam

...Pag-aaral Ang mga mananaliksik ay nagsagawa ng surbeys sa mga ikalawang baiting mag-aaral ng Internal Auditing ng Far Eastern University. Gumamit ng paradismo ang mga mananaliksik upang maunawaan ang proseso ay resulta ng pag-aaral na ito. Output Malalaman ang iba’t ibang persepsyon at pananaw ng mga estudyante ukol sa Qualifying Exam Proseso 1. Surbey 2. Panayam sa propesor ng Accounting 3. Pagsusuri ng mga Datos Input 2nd year Internal Auditing Students Fig 1.2 Paradismong Pag-aaral Inilahad sa paradismo ang mga sumagot o respondents na ang mga 2nd year IA Students ang naging instrumento upang makakalap ng mga datos ay makapagbigay ng ibat’t ibang pananaw sa Qualifying Exam upang manatili sa kursong Internal Audting sa Far Eastern University sa taong 2013-2014. Kabanata II Mga Kaugnay na Literatura at Pag-aaral Habang lumilipas ang panahon, parami ng parami ang mga kabataang nag-aasam maging Certified Public Accountant o CPA. Ngunit lingid sa kanilang kaalaman, hindi ganon kadali upang magpatuloy sa kursong Internal Auditing at Accountancy. Maraming pagsubok ang kinakailanagang suungin upang maipasa ang bawat eksaminasyon. Masasabing napakahirap ng bawat pagsusulit sa Accounting ngunit, isa lamang ito sa mga paraan upang salain ang mga estudyanteng may kakayahan at karapat dapat na magpatuloy sa kursong kanilang tinatahak. Ayon sa/kay __________________, ang accountancy ay tumutukoy sa kursong. Mula sa depinisyong ito, masasabing hindi......

Words: 4198 - Pages: 17

Premium Essay

Business Ethics

...Unix Programming | Mobile applications | Computer networks | Computer Architecture | | | VI Sem - B.Com - Programme RegularEveningTourism | Cost Accounting-II | Business LawsInternational Tourism | Taxation Laws-II | Management Accounting | i. International Fin Managementii. International Marketing | i .Investment Mgtii. Advertising Mgt. | Prof. | Cost & Mgt Accounting-II | Research Methodology | Taxation II | Auditing II | Financial Mgt II | Investment Mgt | F & A | Advanced Fin. Accounting-II | Human Resources Management | Corporate TaxPlanning | Principles of Insurance | International Bus. & Politics of Globalization | Fin .Markets ,Institutions &Financial Services | Audting& Taxation HONORS:Fin&Investment | Accounting Standarts - II | Indirect Taxes | Public Finance & Taxation | | Advanced Accounting | Advanced Cost Accounting | | Portfolio Mgt | Intl. Finance | Business Risk Mgt. | | Fin. Securities &Derivatives | Commodities &Forex Market | VI Sem – Management Programmes Fin -BBM: Mkt- HRM- | Ad. MgtAcountingAdvertising MgtHRD | Indirect TaxesSales MgttOrganl. Devpt | Mergers & Acquisitions Rural MarketingStrategic H R M | Banking & Insurance | Production Management | Business Law | Fin-BBA: Mkt- HRM- | Ad.Mgt. AccountingAdvertising MgtHRD | Indirect TaxesSales......

Words: 2645 - Pages: 11

Premium Essay

Audit Sample Questions

...registered Certified Public Accountant with at least 10 years of work experience in any scope of practice of accountancy. c. Must be of good moral character and may not have been convicted of crimes involving moral turpitude. d. Must not be a Director or Officer of the APO at the time of his appointment. d 17.) Which of the following statements is correct? a. Republic Act No. 9298 is also known as Philippine Accountancy Act of 2003. b. The PICPA was recognized by the Commission, as the APO on October 12, 1975. c. Any candidate who fails in two complete CPA Board examinations can never take another set of examinations. d. None of the above. c 18.) The scope of CPA Board examination includes: a. Theory of Accounts b. Audting Theory c. Both a and b d. None of the above. c 19.) The following choices correspond to cetain type of audit, which of the choices do you think is incorrect? a. External Auditors are the ones who conduct financial statement audits. b. Internal Auditors are the ones who conduct performance audit. c. Government Auditors are the ones who conduct operational audit. d. Internal Auditors are the ones who conduct management audit. a 20.) The following are procedures to gather sufficient appropriate evidence, which one is not included? a. Hacking b. Computation c. Inspection d. Observation...

Words: 1143 - Pages: 5

Premium Essay

Healthcare

...Audting and monitoring should be: 1. An ongoing process; 2. Thorough with regular reporting on it to senior officials, including the board; 3. Regular, periodic audits by qualified people focusing on programs with substantive exposure to government enforcement actions; and 4. Ensuring compliance with specific federal, state, and internal rules and policies. Ongoing monitoring is the program managers’ responsibility. They are the ones most familiar with their own operations and should be charged with identifying risk areas of their responsibility; developing appropriate internal controls, policies, and procedures; and monitoring them to verify they are being followed. Whereas monitoring should be done by program managers, the ongoing auditing of those operations needs to be performed by parties independent of those operations. This is to ensure objectivity in performing the audit reviews. The objectives of these reviews are also different from monitoring. Whereas monitoring is to ensure that policies and procedures are in place and are being followed, auditing is to determine whether the monitoring program is operating as it should and that policies, procedures, and controls adopted are adequate and their effectiveness is validated in reducing errors and risks. The compliance officer should not be directly involved in ongoing monitoring other than to identify potential areas of risk or concern and to track that appropriate follow-up was made in response to......

Words: 1460 - Pages: 6

Premium Essay

Pcoab Review of Pwc

...investors and further the public interest in the preparation of informative, accurate, and independent audit reports for companies the securities of which are sold to, and held by and for, public investors.” After the financial scandals of the early 2000s investor confidence had been shaken in the capital markets. The uncertainty in the relatibablity of information assurance provided by pubic audtirs casue the capital markets to grind to a halt. The establishment of the PCAOB siught to bring back this confidence by way of serving as the auditot of the auditors. Inspections Section 4 of the Sarbanes-Oxley Act required that all auditors of public companies be subject to inspection at regular intervals to assess the level of compliance with audting standards. The PCAOB takes a risk-based approach when identifying which audit firsm and a which engagements to to identify for inspections. Key factors include; market capitalization of the client, likely audit issues involved, as well as high risk such as emerging markets. Firms are split into two distinct groups. Small firms are designated by performing more than one but less than one hundred audits of publicly traded firms. These firms are subject to inspection every three years, restrospectively. Meaning that even if you have not perfromed an audit of an issuer in the last two years the third year is still sibject to inspection. This group represents about anywhere between 475 and 730 inspections per year since they began......

Words: 1700 - Pages: 7

Free Essay

Audting Case 2 Cardillo Travel Systems

...Zach Johnson Case 2- Cardillo Travel Systems 1.) Russel Smith and Helen Shepard faced ethical dilemmas when dealing with the Cardillo Case because they were being pressured to sign off on the transaction between them and United Airlines that was misrepresented as revenue. The SEC, IRS, stockholders, United Airlines, and financial analysts would have been affected by this misappropriation of revenue. Smith owed the responsibility of good faith to all of these stakeholders because he knew what was right and the company executives pressured him into possibly altering the financial statements in Cardillo’s favor. Shepard had the responsibility to verify that the contractual agreement indeed allowed Cardillo to recognize the revenue in the 2nd quarter, but after further investigation this was not the case. Cardillo executives lied to Shepard which was very unethical, and since she caught this, Cardillo dropped Touche as their audit client. Shepard maintained independence and did what was morally correct and also correct by reporting the disagreement to the SEC. 2.) They should verify that all the numbers in the account match up to what is being portrayed on the financial statements. After that they should check each transaction in the account and question the transaction, which Shepard did correctly. She had suspicion and she took the correct path to determining the proper amount. The auditors should have immediately notified Shepard of any suspicious transactions and......

Words: 412 - Pages: 2

Premium Essay

Audting Engagement Letter

...April 23, 2012 Eric Unum, Vice-President-Finance, Apollo Shoes Inc., 100 Shoe Plaza, Shoetown, ME 00001 Dear Sir, Thank you for considering our firm to perform audit and assurance services for your company. My partners and associates are respected in the market and pride themselves with delivering the best quality of services to our clients. We use standardize audit resources and impeccable services by building relationships with our clients offering excellence in assurance, professional conduct, and independence. We approach audits first by understanding the clients business, accumulate data, evaluate data, assess risk factor, and audit and test procedures; making sure all issues are in compliance with the rules and regulations defined by Security Exchange Commissions (SEC). Our assurance programs have various auditing and attesting categories that your company can select. We concentrate in auditing services based upon your need in the areas of system audit, product and services audit, department audit, conformance audit, compliance audit, and process audit. We approach each audit through the evaluation of internal control, analyzing procedures, and applying the best strategic systems approach to auditing. I get involved on the high level assurance valuation in planning and audit procedures process, check and balances in place with control issues, and assist auditors and experts with any analysis questionable. I also involved myself in the final......

Words: 389 - Pages: 2