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auditing procedures

auditing procedures

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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16-26 35 8 The Fox Company is a medium-sized industrial client that has been audited by vour public accounting firm for several years. The only interest-bearing debt owed by Fox Company is $200 000 in long-term notes payable held by the bank. The notes were issued three years previ- ously and will mature in six more years. Fox Company is highly profitable, has no pressing needs for additional financing, and has excellent internal controls over the recording of loan transactions and related interest costs. REQUIRED a. Describe the auditing procedures that you think will be necessary for notes payable and related interest accounts in these circumstances: b. How would your answer differ if Fox Company were unprofitable, had a need for additional financing, and had weak internal controls?
Transcribed Image Text:16-26 35 8 The Fox Company is a medium-sized industrial client that has been audited by vour public accounting firm for several years. The only interest-bearing debt owed by Fox Company is $200 000 in long-term notes payable held by the bank. The notes were issued three years previ- ously and will mature in six more years. Fox Company is highly profitable, has no pressing needs for additional financing, and has excellent internal controls over the recording of loan transactions and related interest costs. REQUIRED a. Describe the auditing procedures that you think will be necessary for notes payable and related interest accounts in these circumstances: b. How would your answer differ if Fox Company were unprofitable, had a need for additional financing, and had weak internal controls?
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