Clara and David are working on the audit of Treadway Enterprises, and are meeting to discuss the client's internal controls: specificallycontrols over the cash disbursements process. Which of the following statements most accurately describes the controls that shouldbe in place for this function?O Before payment of any cash disbursements, the appropriate authorizations should be received, and the correct dollaramounts paid.O Before the audit client proceeds with any cash disbursements, the firm should have appropriate entity-level controls inplace to ensure transactional accuracy.O As part of the cash disbursement cycle, the auditor is likely to examine a sample of receivables controls to ensure theireffectiveness.O None of these answer choices are correct.

Internal controls over the cash disbursement process are essential for safeguarding a company's…

Answered: Clara and David are working on the…

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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An assistant on the Carter Company audit has been working in the revenue cycle and has compiled a list of possible errors and fraud that may result in the misstatement of Carter Company’s financial statements and a corresponding list of controls that, if properly designed and implemented, could assist in preventing or detecting the errors and fraud. For each possible error and fraud numbered a through o, select one internal control from the following answer list that, if properly designed and implemented, most likely could assist management in preventing or detecting the errors and fraud. Each response in the list of controls may be selected once, more than once, or not at all. A. Shipping clerks compare goods received from the warehouse with the details on the shipping documents. B. Approved sales orders are required for goods to be released from the warehouse. C. Monthly statements are mailed to all customers with outstanding balances. D. Shipping clerks compare…
Tests of controls in a GAAS audit are required fora. Obtaining evidence about the financial statement assertions.b. Accomplishing control over the occurrence of recorded transactions.c. Applying analytical procedures to financial statement balances.d. Obtaining evidence about the operating effectiveness of client control activities.
Steve Ankenbrandt, president of Beeb Corporation, has been discussing the company’s internal operations with the presidents of several other multidivision companies. Ankenbrandt discovered that most of them have an internal audit staff. The activities of the staffs at other companies include financial audits, operational audits, and sometimes compliance audits. Required: Describe the meaning of the following terms as they relate to the internal auditing function: a. Financial auditing. b. Operational auditing. c. Compliance auditing.
Case Study: Enhancing Financial Integrity Through Comprehensive Auditing Practices Introduction: In the rapidly evolving landscape of business and finance, the role of auditing has become increasingly crucial. This case study delves into the scenario of a medium-sized manufacturing company, XYZ Manufacturing Inc., that has recognized the importance of auditing accounting practices to enhance financial integrity, compliance, and overall organizational effectiveness. Background: XYZ Manufacturing Inc. has been experiencing growth in its operations, expanding its product lines and market reach. With this growth, the company's management has identified the need for a robust auditing system to ensure accurate financial reporting, compliance with regulatory standards, and the detection of any potential irregularities. Auditing Objectives: The primary objectives of the auditing initiative at XYZ Manufacturing Inc. are as follows: Ensuring Financial Accuracy: The auditing process aims to…
You are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit, (h) Some employees complained that some managers occasionally contradict the instructions of other managers regarding proper data security procedures. Identify the problems and explain them in relation to the internal environment.
The objectives of internal control are to ensure efficient operations and provide reasonable assurance of all of the following EXCEPT A. employees and managers comply with laws and regulations. B. profits are maximized while minimizing spending. C. business information is accurate. D. assets are safeguarded and used for business purposes. A deposit received by the bank will include: A. a credit to the company's bank account. B. no increase or decrease is made to the company's bank account. C. a credit to the cash account on the company's books. D. a debit to the company's bank account. When a bank debits your account, it is decreasing the balance. True False
In testing controls over cash disbursements, an auditor most likely would determine that the person who signs the check also: A. Approves the voucher for payment. C B. C. D. Stamps, perforates or otherwise cancels supporting documents. Returns the checks to accounts payable. Is denied access to the supporting documents.
Please respond promptly: When auditing a private company, the auditor should obtain an understanding of internal control sufficient to___________. Select one: a. Provide a method for safeguarding assets, checking the accuracy and reliability of accounting data, promoting operational efficiency, and encouraging adherence to prescribed managerial policies. b. Provide reasonable protection against client fraud and defalcations by client employees. c. Assess control risk. d. Provide a basis for suggestions to the client for improving the accounting system.
In making client acceptance and continuance decisions, the auditor will perform various procedures in assessing the client. Which of these would most likely not be one of those procedures? a. obtain background checks on management to assess management integrity b. review regulatory filings and examination reports c. analyze client financial statements and compare to industry metrics d. submit management to a lie detector test
From pages 4-1 and 4-2 of the VLN, the COSO Framework describes 5 components of internal control. What is the purpose of internal controls from a financial accounting perspective? 1. To guarantee no fraud will occur in the organization. 2. To help safeguard the company's assets. 3. To help improve the accuracy and reliability of the accounting information. 4.To prevent collusion. Group of answer choices A. 1,2, and 3 B. 2 and 3 C. 2, 3, and 4 D.1, 2, 3, and 4

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