Case Notes - SAK

Answer the following from Chapter 7 of the textbook (write a one page response for each question):  Discussion Question 37:  Explain why Benford's Law is useful to auditors in the detection of fraud.

An external auditor of Roses Corporation sent out positive confirmation requests to 1,000 customers. Population size is 2,400 accounts, with a total recorded value of P400,000. Recorded value of samples selected is P159,960 and audited value of samples is P151,360. What is the estimated population audited value using ratio estimation? A. 400,000 B. 422,728 C. 378,480

You are auditing the financial statements of Blue Pty Ltd, a whitegoods wholesaler. You ask the audit junior to assist you to test whether or not purchases of equipment are fairly stated. You tell him that you will use dollar unit sampling.   Your assistant provides you with the information in the table below.   Number of purchases   6,000   Amount of purchases   $6,000,000   Sample size   60   Dollar value of sample   $600,000   Materiality allocated   $60,000   Error found in the sample   $600   REQUIRED: Draw a conclusion, on the basis of the information provided, as towhether or not purchases are fairly stated. Explain  your answer and show all calculations.

answer

You are a member of the audit team of BSA and Co. examining the accounts of TOK Manufacturing for the year ended December 31, 2020. BSA has audited TOK for the past 5 years. You have been assigned the task of searching for unrecorded liabilities. You have determined that all payroll taxes, income and property taxes, sales taxes, and interest have been properly reflected by TOK. In addition, you have obtained the following copy of TOK's 12/31/20 adjusting journal entry to reflect other unrecorded liabilities at year-end: Raw materials inventory Utilities expense 23,675 6.400 Professional fees 33,690 Manufacturing supplies Accounts payable To record the following invoices unpaid at 12/31/20: Fox Manufacturing 8,900 72,665 P23,675 2,760 Consolidated Gas Meralco Andersen (consulting) Luzmin Suppliers Deli Products 3,640 33,690 7,700 1,200 Although the Luzmin Suppliers invoice was received in December, the supplies were shipped to TOK on January 2 and received on January 4.

An external auditor of Roses Corporation sent out positive confirmation requests to 1,000 customers. Population size is 2,400 accounts, with a total recorded value of P400,000. Recorded value of samples selected is P159,960 and audited value of samples is P151,360. What is the estimated population audited value using ratio estimation? A. 400,000 B. 422,728 C. 378,480   Using the data provided in Roses Corporation, what is the projected misstatement using MPU estimation?A. 151,360 B. 20,640 C. 8,600

Q. Financial Accounting - The supply chain manager at Desert View Hospital implemented a new medication tracking system that monitors three critical factors for controlled substances. Each factor contributes to a daily compliance score: accurate counts worth 40 points per item, proper storage conditions worth 35 points, and documentation accuracy worth 25 points. During yesterday's audit of 200 items, 192 had accurate counts, 188 met storage requirements, and 195 were properly documented. The pharmacy director must determine the overall compliance percentage to report to the regulatory board. Accurate answer

On 1st May, 2024 you are engaged to audit the financial statement of Giant Pharmacy for the period ending 30th December 2023. The Pharmacy is located at Mgeni Nani at the outskirts of Mtoni Kijichi in Dar es Salaam City. Materiality is judged to be TZS. 200,000/=. During the audit you found that all tests produced clean results. As a matter of procedures you drafted an audit report with an unmodified opinion to be signed by the engagement partner. The audit partner reviewed your file in October, 2024 and concluded that your audit complied with all requirements of the international standards on auditing and that; sufficient appropriate audit evidence was in the file to support a clean audit opinion. Subsequently, an audit report with an unmodified opinion was issued on 1st November, 2024. On 18th January 2025, you receive a letter from Dr. Fatma Shemweta, the Executive Director of the pharmacy informing you that their cashier who has just absconded has been arrested in Kigoma with TZS.…

3:21 ◄ Search For the following independent situations, assume that you are the audit partner on the engagement: 1. In reviewing of subsequent events, you learned of heavy damage to the client's warehouse due to a fire occurred after year-end. The loss will partly be reimbursed by insurance. The newspaper described the event in detail. The client made adjustment to related inventories and buildings to reflect the loss. 2. All facts are the same as situation 1, but the client did not make adjustment to year end figure of inventory. 4G 3. During the course of examination on your audit client, you suspect that a material amount of assets has been misappropriated through fraud. Management refuses to allow you to investigate further to confirm the suspicions. 4. The client's financing arrangements expired and the amount outstanding was past due. The client cannot renegotiate or obtain refinancing and is considering filing bankruptcy. Financial statements were prepared using the going…

Audit procedure 1 During controls testing the auditors selected a sample of sales invoices and examined them for evidence of a second person checking the goods invoiced to the goods dispatched notes. The sample was chosen by selecting every 25th invoice in the population. Audit procedure 2 During substantive procedures the auditors selected a sample of balances included in the trade payables figure and wrote to the supplier asking them to confirm the amount owed by the audit client at the year-end. The sample was chosen by the auditor selecting the balances from anywhere within the trade payables breakdown, trying to avoid bias. Identify the ISA 500 (Audit evidence) evidence gathering technique and the sampling method used by the auditors in each of these procedures.

Upper Limit on Misstatements Calculation: Monetary Unit Sampling. Jordan Thomas is using MUS to examine a client’s accounts receivable balance. Using a sample size of 100 items and a sampling interval of $12,300, Thomas identified the following misstatements: Item Recorded Balance Audited Value 1 $15,000 $12,500 2 10,000 4,000 3 3,000 2,000 Required:a. Calculate the upper limit on misstatements assuming a risk of incorrect acceptance of (1) 5 percent and (2) 10 percent.b. Based on your calculations in part (a), comment on the relationship between the risk of incorrect acceptance and the upper limit on misstatements.

Invoice 209 for R4270 made out to B Baker was entered into the account of Baker in error.   Question :   Prepare the general journal entry required to correct the mistake noted

Task #2 Best Wood Furniture, Inc., a non-issuer that produces wood furniture, is undergoing a year 2 audit. The situations below describe changes made during year 2 that may or may not contribute to audit risk. For each situation, select the impact, if any, that the situation has on a specific component of audit risk for the year 2 audit. Selections are for once, more than once, or not at all. Consider each situation independently.   Situation Impact on audit risk   In year 2, the auditor noted that the company's newly hired purchasing agent was not obtaining competitive bids for all major purchase requisitions as required.       Early in year 2, the company expanded its warranty program to cover additional major products in an effort to increase sales.       The audit partner decided that the audit team needed to perform additional tests of detail over payroll in addition to the substantive analytical procedures done last year over payroll.…

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