Mr. Gallagher's small consulting firm specializes in providing internal control advice to his clients. All of his staff are certified internal auditors (CIAs) and want to gain expertise in a variety of industries. Jonas, his most senior consultant, always brings a less-seasoned associate with him for efficiency, training, and general camaraderie. Jonas first assesses a situation in about 4 hours and then will brainstorm ideas the client could use to address its internal control risks. The less-seasoned associate follows Jonas, listens to the half- day assessment ritual, and then helps to brainstorm improvements for the client. Jonas's labor rate is billed at $200/hour, while the associate's billing rate is half that amount. (a) Mr. Gallagher believes Jonas operates on a 90% learning curve for the "assessment" portion of his work, while his associate operates on a 95% learning curve. Create a chart outlining the number of hours each of these individuals is likely to spend on the next assessment of a client's internal controls. How much time will Mr. Gallagher expect each of them to spend on their fourth such assessment of a client's internal controls? (Round answers to 2 decimal places, e.g. 15.25.)

Mr. Gallagher's small consulting firm specializes in providing internal control advice to his clients. All of his staff are certified internal auditors (CIAs) and want to gain expertise in a variety of industries. Jonas, his most senior consultant, always brings a less-seasoned associate with him for efficiency, training, and general camaraderie. Jonas first assesses a situation in about 4 hours and then will brainstorm ideas the client could use to address its internal control risks. The less-seasoned associate follows Jonas, listens to the half- day assessment ritual, and then helps to brainstorm improvements for the client. Jonas's labor rate is billed at $200/hour, while the associate's billing rate is half that amount. (a) Mr. Gallagher believes Jonas operates on a 90% learning curve for the "assessment" portion of his work, while his associate operates on a 95% learning curve. Create a chart outlining the number of hours each of these individuals is likely to spend on the next assessment of a client's internal controls. How much time will Mr. Gallagher expect each of them to spend on their fourth such assessment of a client's internal controls? (Round answers to 2 decimal places, e.g. 15.25.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: You are an induction and training officer for Maher Public Accountants, a leading accounting firm…

A: Audit is an official examination of financial information of an entity. The person who conducts the…

Q: Objective Type Question: Considering the information presented in the discussion on forensic…

A: Eliminating the incorrect options:Option A. Uncovering financial irregularities after they…

Q: Adrianna has been hired as an accounting coordinator at a new dermatology office. During a meeting…

A: Internal control procedures refer to the policies, practices, and processes put in place by an…

Q: Employee theft is the largest "expense" of a business in this country. The key to implementing…

A: Employee theft is one of the most dangerous problem facing in businesses all over the country. The…

Q: Obtaining a “Sufficient” Understanding of Internal Control. The 12 partners of a regional public…

A: Answer:- Internal control:- Internal control is a procedure for ensuring that an corporation's…

Q: The CEO of the Baker Inc, wants to implement a new accounting system, to improve work flow through…

A: Internal audit means the service of audit independently in order to determine the internal controls…

Q: Leonard Moses is planning to grow its customer base and is in the process of creating an online…

A: Internal Control -Internal control is the collection of guidelines, policies, and processes that…

Q: You have recently joined the internal audit activity at Ewing Oil & Gas. During your lunch break you…

A: Internal audit plays a crucial role in maintaining transparency, accountability, and governance…

Q: than sets a meeting

A: Vick should seek support from individuals or entities that promote ethical conduct and have the…

Q: Based on this information, what might be a prudent approach to substantive testing by Daisy CROS?

A: Based on the information provided, here are some prudent approaches to substantive testing by Daisy…

Q: A computer-based information system is expected to have general IT controls in place. Discuss the…

A: General IT controls are policies and procedures that relate to many applications and support the…

Q: The goal of this problem is to identify and implement the proper internal controls on the following…

A: Internal controls are the systems, rules, and processes implemented by the company to ensure the…

Q: You have been appointed as head of newly created internal audit section within the computer…

A: As the recently hired head of the internal audit division in the computer department of a major food…

Q: Look at the following descriptions of how management, the auditor and the audit committee (or board…

A: The audit committee is a crucial component of corporate governance, responsible for various tasks…

Q: Tom and Wilma are working on the audit of internal control for Progress Enterprises and are…

A: Segregation of duties is an important control in ensuring an effective system of internal controls.…

Q: How would you know if all the necessary disclosures were prepared and contained correct information?

A: Introduction: Accounting policy: Accounting policy can be defined as the rules, regulations and…

Q: Mr. Anderson believes Jonas operates on a 80% learning curve for the "assessment" portion of his…

A: To create a chart outlining the number of hours each individual is likely to spend on the next…

Q: How could Pascal and Super Tech have identified and addressed this risk? What should Pascal do now?…

A: Introduction: In this case, the organization should implement a risk-reduction strategy. The…

Question

Mr. Gallagher's small consulting firm specializes in providing internal control advice to his clients. All of his staff are certified internal
auditors (CIAs) and want to gain expertise in a variety of industries. Jonas, his most senior consultant, always brings a less-seasoned
associate with him for efficiency, training, and general camaraderie. Jonas first assesses a situation in about 4 hours and then will
brainstorm ideas the client could use to address its internal control risks. The less-seasoned associate follows Jonas, listens to the half-
day assessment ritual, and then helps to brainstorm improvements for the client. Jonas's labor rate is billed at $200/hour, while the
associate's billing rate is half that amount.
(a)
Mr. Gallagher believes Jonas operates on a 90% learning curve for the "assessment" portion of his work, while his associate
operates on a 95% learning curve. Create a chart outlining the number of hours each of these individuals is likely to spend on the
next assessment of a client's internal controls. How much time will Mr. Gallagher expect each of them to spend on their fourth
such assessment of a client's internal controls? (Round answers to 2 decimal places, e.g. 15.25.)
Time spent on the fourth assessment
e Textbook and Media
Save for Later
Jonas
hours
Jonas' associate
hours
Attempts: unlimited Submit Answer

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: The learning curve formula

VIEW

Step 2: Let's calculate the time spent on the next assessment and the fourth assessment

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 9 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

1) Why is Responsibility Accounting necessary and how is it implemented? 2) Determination of control risk in the HR cycle (personnel) include an example of the explanation you gave? 3) To design an audit program for testing controls, what stages must the auditor go through when auditing a banking service company?
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.
Marissa is an audit intern working at Marshall CPA firm. Her supervisor at Marshall CPA firm has explained that the audit of property, plant and equipment and the related accounts ties in to management's expectations of the firm's earnings. Marissa is unclear as to how this relationship works and asks the supervisor to elaborate. Which of the following would be the most accurate response? O The relationship is fairly straightforward. If the client's management is keen to show strong earnings to beat analysts' expectations, they may manipulate depreciation expenses to boost these earnings. O The best way to think about this relationship is to think about how fixed assets are depreciated over time, and the incentive management has to shorten useful lives to decrease depreciation expenses. The relationship works on the premise that when property, plant and equipment is amortized, the firms earnings are boosted through the accelerated amortization of fixed assets. O None of these answer…
Is it an entity inherent risk for the information below? A computer network and personal computers support Marco Inc's accounting and inventory management systems. Personal computers are located in the offices and warehouse and a central server handles all accounting and inventory files. Printers are located in areas where employees need printed documents and other records routinely. The computer is used to control and process most transactions, to print documents, prepare accounting records, and prepare periodic financial statements. Marco uses commercial software recommended by their auditor. To date, they have had only the usual startup problems. They have used it for two years and have upgraded it once. If it is an inherent risk, what is the feature of the firm that will possibly affect inherent risk and explain how and why; that is whether it increases or decreases inherent risk. Please address a specific risk to the accuracy of the financial statements with the "how" and whether…
1. Madeline is a CPA and the CFO of ABC Company. Madeline’s sister is Katherine. Katherine is a CPA who just joined the office of Billem and Howe, CPA’s as a Senior Accountant. Katherine has been assigned to the Los Angeles office. ABC Company’s headquarters is in Austin, Texas, which is where Madeline has her office. ABC has asked Billem and Howe to bid on the attest engagement. All of the audit work will be performed from Billem and Howe’s Austin office with no support or coordination from the Los Angeles office. Question: Does it matter if Katherine owns stock in ABC?
Assume Ethan Lester and Vick Jensen are CPAs. Ethan was seen as a “model employee” who deserved a promotion to director of accounting, according to Kelly Fostermann, the CEO of Fostermann Corporation, a Maryland-based, largely privately held company that is a prominent global designer and marketer of stereophonic systems. The company has an eleven person board of directors. Kelly considered Ethan to be an honest employee based on performance reviews and his unwillingness to accept the promotion, stating that he wasn’t ready yet for the position. Kelly admired his willingness to learn and grow, not just expect a promotion. Little did she know that Ethan was committing a $50,000 fraud during 2015 by embezzling cash from the company. In fact, no one seemed to catch on because Ethan was able to override internal controls. However, the external auditors were coming in and to solidify the deception, he needed the help of Vick Jensen, a close friend who was the accounting manager and also…
CASE: You are a fraud expert and have been asked to investigate possible wrongdoing at a local nonprofit organization. You suspect that one of the workers, Stacey, has been embezzling money. After securing enough evidence to be very confident of Stacey's guilt, you speak with the president of the organization, Jamie. Jamie assures you that Stacey could be doing nothing wrong, that she has known Stacey for years, and Stacey is a good person. Further, she indicates that because of her relationship with Stacey, even if something were going wrong, no action would be taken with respect to the potential fraud. QUESTIONS: 1)How do you respond to Jamie? How do you explain to her what is at stake? 2) What monitoring and control systems should have been in place at Jamie's organization to prevent such a behavior? Explain. 3)Would you recommend an ethics audit to this company? Why?