Assessment of Inherent Risk Assessment of Control Risk
.
a. Yes Yes
b. Yes No
c. No Yes
d. No No
A client acquired 25% of its outstanding capital stock after year-end and prior to completion of the auditor’s fieldwork. The auditor should
D. Advise management to disclose the acquisition in the notes to the financial statements.
Which of the following statements is correct regarding an accountant’s working papers?
B The accountant owns the working papers but generally may not disclose them without the client’s consent or a court order
For which of the following judgments may an independent auditor share responsibility with an entity's internal auditor who is assessed to be both competent and objective?
D. Assessment of Inherent Risk (no) Assessment of Control Risk (no)
Which of the following procedures would an auditor most likely perform for year-end accounts receivable confirmations when the auditor did not receive replies to second requests?
D. Inspect the shipping records documenting the merchandise sold to the debtors
Beta Company uses its sales invoices for posting perpetual inventory records. Inadequate controls over the invoicing function allow goods to be shipped that are not invoiced. The inadequate controls could cause an:
C Understatement of revenues and receivables, and an overstatement of inventory.
A client acquired 25% of its outstanding capital stock after year-end and prior to completion of...
Case Study Analysis: Fred Stern & Company, Inc. (Knapp): In the business world of the Roaring Twenties, the schemes and scams of flimflam artists and confidence men were legendary. The absence of a strong regulatory system at the federal level to police the securities markets—the Securities and Exchange Commission was not established until 1934—aided, if not encouraged, financial frauds of all types. In all likelihood, the majority of individuals involved in business during the 1920s were scrupulously honest. Nevertheless, the...