The senior on your audit engagement suspects there might be fraud in the company you are auditing. As such he assigns you, a first year staff, to investigate the financial statements and anything else you feel appropriate and then to report your findings. As part of your investigation you will consider which of the following:
| a. |
the financial statements alone |
|
| b. |
financial statement numbers compared with real-world numbers |
|
| c. |
company management and their motives |
|
| d. |
both B and C |
Ans) the correct option is d) both B and C
There will be a need to check the company management and there should be a check on motives if they are correctly matched
The senior on your audit engagement suspects there might be fraud in the company you are...
II. Class Project: Assume you are the senior accountant on an audit engagement of a fictitious business, Pine Street Company (PSC). Assume the instructor is the engagement partner. You are to prepare an audit program for PSC. The firm manufactures and sells bicycles. The audit program must be in one of the following areas of the business: accounts receivable and revenues; inventories and costs of goods sold; accounts payable; payroll; or property, plant and equipment. Week 2 - Identify the...
You have recently been appointed as an audit assistant for MKZ Auditing LLC, a popular auditing firm based in Al Ain. Your line manager spoke to you two weeks ago to inform you that you have been assigned with another senior auditing staff to undertake a visit and audit a client called SMC Hotels LLC.Your line manager has tasked you to liaise with the senior auditing staff to prepare a presentation to be delivered to the senior management on how...
Assume that you are the audit partner on the engagement. During the audit at A company, the client prevented you from being able to observe the counting of fixed asset. The fixed asset amount is material in the client's financial statements. But, you were able to perform alternative procedures to support the existence and valuation of fixed assets at the year end 1. Identify which of the condition requiring a deviation from a standard unmodified opinion audit report is applicable,...
You are the internal audit senior responsible for conducting an assurance engagement of the XYZ Company payroll process. This process has not been audited for three years and, as such, is due in the normal audit cycle. There have been no significant changes since the previous audit, that is, there were no system changes, no reorganization of personnel, and no substantive procedural changes. However, during the last assurance engagement, the internal audit function identified several observations, some of which were...
You are the internal audit senior responsible for conducting an assurance engagement of the XYZ Company payroll process. This process has not been audited for three years and, as such, is due in the normal audit cycle. There have been no significant changes since the previous audit, that is, there were no system changes, no reorganization of personnel, and no substantive procedural changes. However, during the last assurance engagement, the internal audit function identified several observations, some of which were...
You and your best friend are both majoring in accounting, and the two of you have had several courses together throughout your studies. Due to a scheduling conflict, you're on your own in the auditing class, and loving the content so far! As you try to explain the class to your friend, it becomes clear that he doesn't really understand the audit process. He asks you the following questions: Isn't it the auditor's job just to check the numbers and...
You are Mark Ouse, an audit senior with the firm Pull, Lift, Tug & Co. You are planning the financial report audit of Nestree Ltd, a manufacturer of confectionery. The following issues have arisen. Arthur Stick, the Finance Manager of Nestree, was ill for three months of the year and Eloise Lift, the engagement partner, received a request from Nestree to supply a member of staff on secondment until Arthur was well. Eloise was only too happy to help and...
As discussed in the video introduction, accounting fraud in large public companies has produced its fair share of major news headlines over the past 20 years. Even though laws like Sarbanes Oxley have been put in place to minimize the opportunity for financial fraud, the threat is still real in today’s corporate environment. Imagine you have been hired to oversee the financial audit of a major company in your city. During the audit, one of the company’s employees has disclosed...
For the following independent situations, assume that you are the audit partner on the engagement: 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 over the past several months that has caused you to have substantial doubt about YogurtLand’s ability to continue as a going concern. Intelligis Electronics is a manufacturer of advanced electrical components. During the year, changes in the market resulted in...
The question reads: The Engagement Letter for Oceanview Marine Company is missing 2 pieces. Make the needed changes/additions directly on the Engagement Letter. LILTS BERGER & ASSOCIATES 4-1 Certified Public Accountants CW 11/23/2018 Ocean City, Florida 33140 October 30, 2018 Mr. Donald Phillips, President 36 Clearwater Lake Road Ocean City, Florida 33140 Dear Mr. Phillips: You have requested that we audit the financial statements of Oceanview Marine Company, which comprise the balance sheet for December 31, 2018, and the related...