Items 1 through 9 are selected questions typically found in internal control questionnaires used by auditors to obtain an understanding of internal control in the payroll and personnel cycle. In using the questionnaire for a client, a “yes” response to a question indicates a possible internal control, whereas a “no” indicates a potential deficiency. 1. […]
ACCOUNTS AND TRANSACTIONS IN THE PAYROLL AND PERSONNEL CYCLE Identify the accounts and transactions in the payroll and personnel cycle.
RISK ASSESSMENT PROCEDURES 1. At what two levels does the auditor assess the risk of material misstatement? 2. Describe the types of procedures that constitute risk assessment procedures.
You are the manager in the audit of Vernal Manufacturing Company and are turning your attention to the income statement accounts. The in-charge auditor assessed control risk for all cycles as low, supported by tests of controls. There are no major inherent risks affecting income and expense accounts. Accordingly, you decide that the major emphasis […]
The following questions concern the audit of income and expense accounts. Choose the best response. a. The auditor may note that annual depreciation expense is too low for a class of assets by noting (1) insured values greatly in excess of carrying amounts. (2) large numbers of fully depreciated assets are still in use. (3) […]
Identify three asset accounts, three expense accounts, and three liability accounts typically associated with acquisition and payment cycle transactions. 19-2 (OBJECTIVE 19-2) Explain the relationship between substantive tests of transactions for the acquisition and payment cycle and tests of details of balances for the verification of property, plant, and equipment. Which aspects of property, plant, […]
COMPLETING THE TESTS IN THE ACQUISITION AND PAYMENT CYCLE: VERIFICATION OF SELECTED ACCOUNTS Recognize the many accounts in the acquisition and payment cycle.Design and perform audit tests of property, plant, and equipment and related accounts.Design and perform audit tests of prepaid expenses.Design and perform audit tests of accrued liabilities.Design and perform audit tests of income […]
1. Describe what is meant by the cycle approach to auditing. What are the advantages of dividing the audit into different cycles? 2. Define what is meant by a management assertion about financial statements. Describe how PCAOB assertions and assertions in international and AICPA auditing standards are similar and different.
CIVIL LIABILITY UNDER THE FEDERAL SECURITIES LAWS 1. What are the four major sources of auditors’ legal liability? 2. Compare and contrast traditional auditors’ legal responsibilities to clients and third-party users under common law. How has that law changed in recent years? 3. What are the auditor’s possible defenses against lawsuits filed under the Securities […]
The following auditing procedures were performed in the audit of accounts payable: 1. Obtain a list of accounts payable. Re-add and compare with the general ledger. 2. Trace from the general ledger trial balance and supporting documentation to deter- mine whether accounts payable, related parties, and other related assets and liabilities are properly included in […]
