Identify six or more internal controls in Honey Best’s inventory and warehousing cycle. For each control identified, list a corresponding test of controls that can be used to test the effectiveness of internal controls over inventory.

You are responsible for the audit of inventory for Honey Best Grocery Wholesale, Inc., a closely held grocery wholesaler that sells to independent grocery stores. Inventory is by far the largest account on their balance sheet. Honey Best operates in 10 southeastern states with a central distribution center in Atlanta and local distribution centers in […]

Design a test of control to determine whether the control is operating effectively.

The Frist Corporation has the following internal controls related to inventory: 1. Only authorized inventory and warehousing personnel are allowed in inventory stor- age areas. 2. All inventory products are stored in warehousing areas that are segregated from other storage areas used to house equipment and supplies. 3. All inventory held on consignment at Frist […]

How might the auditor’s consideration of materiality and internal control differ from the audit of a commercial enterprise?

The audit firm of Waggoner and Allen, LLP, recently received a request to submit a proposal to audit the financial statements of the Williamson County Public School System. The system is funded mostly through property tax assessments of county residents, but it also receives over $15 million in federal financial funding in addition to private […]

Which of the following best describes the operational audit?

The following questions deal with operational auditing. Choose the best response. a. Which of the following best describes the operational audit? (1) It concentrates on seeking aspects of operations in which waste would be reduced by the introduction of controls. (2) It requires constant review by internal auditors of the administrative controls as they relate […]

What evidence will Schroeder likely use in order to perform the agreed-upon procedures?

Schroeder, CPA, has been engaged by Somerville Company to conduct agreed-upon procedures related to an investment performance schedule of the Red Cedar Investment Fund. Somerville has requested that Schroeder recalculate the rate of return on specific investments, according to an agreed-upon formula, and determine whether the computed rate of return agrees to the rate of […]

How would the supplemental report change if net earnings after taxes were $1,020,000 and dividends paid were $80,000?

Nilsson, CPA, is conducting the audit of Ellison Waste Management Corporation. In addition, a supplemental negative assurance report is required for a major mortgage holder. The supplemental report concerns indenture agreements to keep the client from defaulting on the mortgage. Total assets are $14 million, and the mortgage is for $4 million. The major provisions […]

To what extent might users of the report demand more assurance about the information contained in the report?

With greater frequency, organizations are issuing sustainability reports that describe how they engage in socially responsible activities. Many believe that users will increasingly want assurances from CPAs about the reliability of the information presented by management in these reports. Visit the website for the Home Depot Company (www.homedepot.com) and locate the company’s 2018 Sustainability Report. […]

What are the differences between the review reports for a private company under SSARS and for the interim financial statements of a public company?

What is meant by the term level of assurance? How does the level of as- surance differ for an audit of historical financial statements, a review, a compilation, and a preparation engagement? 25-2 (OBJECTIVE 25-1) What is negative assurance? Why is it used in a review engagement report? 25-3 (OBJECTIVE 25-1) What should auditors do […]

What factors discussed above are relevant for a going-concern assessment for MakingNewFriends.com? What additional information might the auditor consider in the going-concern assessment?

Callie Peters is completing the audit of Making New Friends.com for the year ended December 31, 2019. Callie has been the audit manager on this engagement for the past three years. MakingNewFriends.com issued stock two years ago but has had difficulty establishing a loyal client base and generating advertising revenues. In reviewing results for the […]

Prepare a four-column proof of cash for the month ended October 31. It should show both adjusted and unadjusted cash.

You are doing the first-year audit of Sherman School District and have been assigned responsibility for doing a four-column proof of cash for the month of October 2019. You obtain the following information: In-class Discussion Required *Based on AICPA question paper, American Institute of Certified Public Accountants. 778Part 4 / APPLICATION OF THE AUDIT PROCESS […]

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