When you are first retained to audit the financial statements of Wabash Company, you inquire whether a budget is used to control costs and expenses. The controller, James Lowe, replies that he personally prepares such a budget each year, but that he regards it as a highly confidential document. He states that you may refer to it if necessary, but he wants you to make sure that no employee of the firm sees any of the budget data. Comment on this use of a budget.

When you are first retained to audit the financial statements of Wabash Company, you inquire whether a budget is used to control costs and expenses. The controller, James Lowe, replies that he personally prepares such a budget each year, but that he regards it as a highly confidential document. He states that you may refer to it if necessary, but he wants you to make sure that no employee of the firm sees any of the budget data. Comment on this use of a budget.

Accounting Information Systems

10th Edition

ISBN:9781337619202

Author:Hall, James A.

Publisher:Hall, James A.

Chapter14: Auditing It Controls Part I: Sarbanes-oxley And It Governance

Section: Chapter Questions

Problem 12P

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