Auditing P 6-22 Often, questions have been raised "regarding the responsibility of the independent auditor for the auditor for the discovery of fraud (including misappropriation of assets and fraudulent financial reporting), and concerning the proper course of conduct of the independent auditor when his or her audit discloses specific circumstances that arouse suspicion as to the existence of fraud."
Required:
a. What are (1) the function and (2) the responsibilities of the independent auditor in the audit of financial statements? Discuss fully, but in this part do not include fraud in the discussion.
b. What are the responsibilities of the independent auditor for the detection of fraud? Discuss fully.
c. What is the independent auditor's proper course of conduct when the audit discloses specific circumstances that arouse suspicion as to the existence of fraud?
Click here for the solution: Often, questions have been raised "regarding the responsibility of the independent auditor for the auditor for the discovery of fraud
Showing posts with label regarding. Show all posts
Showing posts with label regarding. Show all posts
Tuesday, September 8, 2015
Wednesday, September 2, 2015
Which of the following is true regarding the Budgetary Comparison Schedule?
1. Which of the following is true regarding the Budgetary Comparison Schedule?
2. Assume encumbrances do not expire at year-end. $15,000 was encumbered during the prior year for a computer and the actual cost of the computer in the current year is $12,000. How does this affect unreserved fund balance?
3. Which of the following items would typically not need an encumbrance?
4. Which of the following is not considered Required Supplementary Information (RSI)?
5. Fiduciary funds are to use the:
6. Level "A" GAAP for The University of Virginia, a public institution, would be established by the:
7. Which of the following is true regarding the composition of the Comprehensive Annual Financial Report (CAFR)?
8. Under the modified accrual basis of accounting, revenues should be recognized when they are:
9. The Governmental Accounting Standards Board has been given authority to establish accounting and financial reporting standards for:
10. Which of the following is true regarding the government-wide Statement of Activities?
Click here for the solution: Which of the following is true regarding the Budgetary Comparison Schedule?
2. Assume encumbrances do not expire at year-end. $15,000 was encumbered during the prior year for a computer and the actual cost of the computer in the current year is $12,000. How does this affect unreserved fund balance?
3. Which of the following items would typically not need an encumbrance?
4. Which of the following is not considered Required Supplementary Information (RSI)?
5. Fiduciary funds are to use the:
6. Level "A" GAAP for The University of Virginia, a public institution, would be established by the:
7. Which of the following is true regarding the composition of the Comprehensive Annual Financial Report (CAFR)?
8. Under the modified accrual basis of accounting, revenues should be recognized when they are:
9. The Governmental Accounting Standards Board has been given authority to establish accounting and financial reporting standards for:
10. Which of the following is true regarding the government-wide Statement of Activities?
Click here for the solution: Which of the following is true regarding the Budgetary Comparison Schedule?
The fourth standard of reporting states: "The auditor must either express an opinion regarding the financial statements
16-38 (Types of Engagements and Reports) The fourth standard of reporting states: "The auditor must either express an opinion regarding the financial statements, taken as a whole, or state that an opinion cannot be expressed in the auditor's report. When the auditor cannot express an overall opinion, the auditor should state the reasons therefore in the auditor’s report. In all cases where an auditor's name is associated with financial statements, the auditor should clearly indicate the character of the auditor’s work, if any, and degree of responsibility the auditor is taking in the auditor’s report."
Required:
In each of the following independent situations, indicate how the CPA responds to this standard.
(a) The CPA is engaged to prepare the financial statements for a non-public entity without performing an audit or review.
(b) The CPA is engaged to compile and review the financial statements of a nonpublic company.
(c) The CPA is engaged to prepare the federal and state income tax returns. No other services are provided.
(d) The CPA is engaged to audit the annual financial statements of a public company.
(e) The CPA's name is contained in the client's registration statement that includes audited financial statements for the year ended December 31, 2010, and unaudited financial statements for the three months ended March 31, 2011. The SEC requires the CPA to include in the registration statement consent to the use of the public accounting firm's name in the statement.
Click here for the solution: The fourth standard of reporting states: "The auditor must either express an opinion regarding the financial statements
Required:
In each of the following independent situations, indicate how the CPA responds to this standard.
(a) The CPA is engaged to prepare the financial statements for a non-public entity without performing an audit or review.
(b) The CPA is engaged to compile and review the financial statements of a nonpublic company.
(c) The CPA is engaged to prepare the federal and state income tax returns. No other services are provided.
(d) The CPA is engaged to audit the annual financial statements of a public company.
(e) The CPA's name is contained in the client's registration statement that includes audited financial statements for the year ended December 31, 2010, and unaudited financial statements for the three months ended March 31, 2011. The SEC requires the CPA to include in the registration statement consent to the use of the public accounting firm's name in the statement.
Click here for the solution: The fourth standard of reporting states: "The auditor must either express an opinion regarding the financial statements
Friday, August 21, 2015
Identify the TRUE statement regarding non-recurring items on the income statement
MULTIPLE CHOICE
1. Identify the TRUE statement regarding non-recurring items on the income statement. (Points : 2)
2. Which of the following is NOT a category of inventory used in a manufacturing company? (Points : 2)
3. The City of Gunnison awarded a $5,000,000 road-construction contract to the Fast Builders Construction Company. Construction was expected to take three years. After one year, Fast Builders had incurred $625,000 of cost and was approximately 20% completed with the road. The company estimated that another $2,500,000 would be expended to complete the contract. The company is confident regarding its estimates. What amount of profit, if any, should Fast Builders recognize for the first year? (Points : 2)
4. Which of the following should be subtracted out to arrive at the proper amount of net sales revenue to be reported on the income statement.
Estimated sales
discounts to be Expected
taken by customers Warranty Costs (Points : 2)
5. Cost of goods sold for a manufacturing company would be calculated as
Beginning finished goods inventory (BFGI)
Ending finished goods inventory (EFGI)
Work-in-process (WIP)
Cost of goods manufactured (CGM)
Raw materials (RM)
Overhead (OH) (Points : 2)
6. Automated Merchandising Company uses the LIFO method of cost assignment. The following data are available:
Date Units Unit Cost Total Cost
Beginning inventory Jan. 1 400 $24 $ 9,600
Purchase Mar. 13 800 28 22,400
Purchase June 20 1,200 32 38,400
Ending inventory Dec. 31 200
The value of the ending inventory will be (Points : 2)
7. Duhany Auto Company sold off a major segment of its business during March of 2007 at a loss. The loss from the sale should be reported in the firm's financial statements as a(n)(Points : 2)
8. Which of the following items is reported on an income statement?
Income from Cash provided
Continuing operations by operations (Points : 2)
9. Which of the following is NOT a deduction on the income statement when computing net income? (Points : 2)
10. Work-in-process includes all of the items below EXCEPT (Points : 2)
11. The FIFO inventory cost method differs from the LIFO method in that the (Points : 2)
12. For most firms, revenue is recognized (Points : 2)
13. Product lines eliminated by a company due to the fact that they no longer generate profits are known as (Points : 2)
14. The Fat Brush Paint Store sold merchandise on 30-day credit in the amount of $1,500. A discount of 3% was offered if the customer would pay within 10 days. What is the minimum amount that should be recorded on the day of sale for Accounts Receivable? (Points : 2)
15. Which inventory method results in the lowest income taxes during periods of increasing prices? (Points : 2)
16. The Philandering Soy Company reported the following accounts receivable balances for 2008:
Beginning of the year $84,000
End of the year 90,000
This information means that (Points : 2)
17. The Food-Mart Grocery is preparing its 2007 income statements. In doing so, cost of goods sold and wages expense are both deducted in computing which of the following?
Operating Income Gross Profit (Points : 2)
18. Certain depreciation costs and the amounts paid to certain employees would be reported on the income statement as part of cost of goods sold if the company (Points : 2)
19. A loss from a natural disaster that is both unusual and infrequent should be reported on a company's income statement (Points : 2)
20. The Big Tobacco Company sells cigars. Inventory information for a recent week is below:
Units Unit Cost Total Cost
Beginning inventory 2 $ 6 $12
Purchase 4 8 32
Purchase 6 10 60
If five units were sold during the week, what is the COST OF GOODS SOLD if the LIFO method is used? (Points : 2)
Click here for the solution: Identify the TRUE statement regarding non-recurring items on the income statement
1. Identify the TRUE statement regarding non-recurring items on the income statement. (Points : 2)
2. Which of the following is NOT a category of inventory used in a manufacturing company? (Points : 2)
3. The City of Gunnison awarded a $5,000,000 road-construction contract to the Fast Builders Construction Company. Construction was expected to take three years. After one year, Fast Builders had incurred $625,000 of cost and was approximately 20% completed with the road. The company estimated that another $2,500,000 would be expended to complete the contract. The company is confident regarding its estimates. What amount of profit, if any, should Fast Builders recognize for the first year? (Points : 2)
4. Which of the following should be subtracted out to arrive at the proper amount of net sales revenue to be reported on the income statement.
Estimated sales
discounts to be Expected
taken by customers Warranty Costs (Points : 2)
5. Cost of goods sold for a manufacturing company would be calculated as
Beginning finished goods inventory (BFGI)
Ending finished goods inventory (EFGI)
Work-in-process (WIP)
Cost of goods manufactured (CGM)
Raw materials (RM)
Overhead (OH) (Points : 2)
6. Automated Merchandising Company uses the LIFO method of cost assignment. The following data are available:
Date Units Unit Cost Total Cost
Beginning inventory Jan. 1 400 $24 $ 9,600
Purchase Mar. 13 800 28 22,400
Purchase June 20 1,200 32 38,400
Ending inventory Dec. 31 200
The value of the ending inventory will be (Points : 2)
7. Duhany Auto Company sold off a major segment of its business during March of 2007 at a loss. The loss from the sale should be reported in the firm's financial statements as a(n)(Points : 2)
8. Which of the following items is reported on an income statement?
Income from Cash provided
Continuing operations by operations (Points : 2)
9. Which of the following is NOT a deduction on the income statement when computing net income? (Points : 2)
10. Work-in-process includes all of the items below EXCEPT (Points : 2)
11. The FIFO inventory cost method differs from the LIFO method in that the (Points : 2)
12. For most firms, revenue is recognized (Points : 2)
13. Product lines eliminated by a company due to the fact that they no longer generate profits are known as (Points : 2)
14. The Fat Brush Paint Store sold merchandise on 30-day credit in the amount of $1,500. A discount of 3% was offered if the customer would pay within 10 days. What is the minimum amount that should be recorded on the day of sale for Accounts Receivable? (Points : 2)
15. Which inventory method results in the lowest income taxes during periods of increasing prices? (Points : 2)
16. The Philandering Soy Company reported the following accounts receivable balances for 2008:
Beginning of the year $84,000
End of the year 90,000
This information means that (Points : 2)
17. The Food-Mart Grocery is preparing its 2007 income statements. In doing so, cost of goods sold and wages expense are both deducted in computing which of the following?
Operating Income Gross Profit (Points : 2)
18. Certain depreciation costs and the amounts paid to certain employees would be reported on the income statement as part of cost of goods sold if the company (Points : 2)
19. A loss from a natural disaster that is both unusual and infrequent should be reported on a company's income statement (Points : 2)
20. The Big Tobacco Company sells cigars. Inventory information for a recent week is below:
Units Unit Cost Total Cost
Beginning inventory 2 $ 6 $12
Purchase 4 8 32
Purchase 6 10 60
If five units were sold during the week, what is the COST OF GOODS SOLD if the LIFO method is used? (Points : 2)
Click here for the solution: Identify the TRUE statement regarding non-recurring items on the income statement
Saturday, August 1, 2015
The fourth standard of reporting states: “The auditor must either express an opinion regarding the financial statements
16-38: The fourth standard of reporting states: “The auditor must either express an opinion regarding the financial statements, taken as a whole, or state that an opinion cannot be expressed in the auditor’s report. When the auditor cannot express an overall opinion, the auditor should state the reasons therefore in the auditor’s report. In all cases in which an auditor’s name is associated with financial statements, the auditor should clearly indicate the character of the auditor’s work, if any, and the degree of responsibility the auditor is taking in the auditor’s report.”
Required
In each of the following independent situations, indicate how the CPA responds to this standard.
a. The CPA is engaged to prepare the financial statements for a nonpublic entity without performing an audit or review.
b. The CPA is engaged to compile and review the financial statements of a nonpublic company.
c. The CPA is engaged to prepare the federal and state income tax returns. No other services are provided.
d. The CPA is engaged to audit the annual financial statements of a public company.
e. The CPA’s name is contained in the client’s registration statement that includes audited financial statements for the year ended December 31, 2010, and unaudited financial statements for the three months ended March 31, 2011. The SEC requires the CPA to include in the registration statement consent to the use of the public accounting firm’s name in that statement.
Click here for the solution: The fourth standard of reporting states: “The auditor must either express an opinion regarding the financial statements
Required
In each of the following independent situations, indicate how the CPA responds to this standard.
a. The CPA is engaged to prepare the financial statements for a nonpublic entity without performing an audit or review.
b. The CPA is engaged to compile and review the financial statements of a nonpublic company.
c. The CPA is engaged to prepare the federal and state income tax returns. No other services are provided.
d. The CPA is engaged to audit the annual financial statements of a public company.
e. The CPA’s name is contained in the client’s registration statement that includes audited financial statements for the year ended December 31, 2010, and unaudited financial statements for the three months ended March 31, 2011. The SEC requires the CPA to include in the registration statement consent to the use of the public accounting firm’s name in that statement.
Click here for the solution: The fourth standard of reporting states: “The auditor must either express an opinion regarding the financial statements
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