Which of the following would increase the rate of deviation from last year's audit?client's computer system has been in place for the past four yearsclient has changed its internal control proceduresclient has same staff as last yearclient's accounting policies have remained unchanged from previous years

Changes in internal control procedures can introduce new risks, errors, or inconsistencies that the…

Answered: Which of the following would increase…

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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Carico Ltd, a manufacturer of construction blocks, operates with a fiscal year-end of June 30th, 2021. With a trading history spanning over 25 years, Carico caters to a diverse range of customers, including both large and small hardware stores nationwide. The company's operations encompass a manufacturing plant, five warehouses, and a central head office. Following the manufacturing process, the blocks are stored in one of the warehouses until they are dispatched to customers. It is important to note that Carico currently does not possess an internal audit department. The following is a reflection of the sales system: • • Each customer is assigned a distinct customer account number, which is utilized to input sales orders upon receiving written requests from customers. The responsibility of entering orders lies with an order clerk, and the system performs an automated verification to ensure product availability and prevent the customer from exceeding their credit limit. maintains a New…
Internal Control System Required: A list of terms and another list of definitions and examples are presented below. Match the directly related definition or example with the each term. Strategic risk Control environment Information and communication Business process risk Monitoring A member of upper management was fired for violating the company's code of conduct. The internal audit group is testing the operating effectiveness of various internal control activities. Competitors begin offering extended warranty coverage on products. Problems with our suppliers have resulted in lost sales because our stores were out of stock. Reports documenting problems with production are forwarded to management.
Which of the following is NOT a reason the auditor performs some substantive procedures at an interim audit date? O increase the effectiveness of the overall audit O client may require it for reporting purposes O allow the audit firm to decrease the amount of work during their 'busy season' O increases the efficiency of the year-end audit
Which two of the following characterize the work of fraud examiners?a. Analysis of control weaknesses for determination of acceptable fraud risk.b. Analysis of control strengths as a basis for planning other audit procedures.c. Determination of a materiality amount that represents a significant misstatement of the financial statements.d. Consideration of a materiality amount in cumulative terms—that is, becoming large over a number of years
Risk Identification and Plan of Action Baker Manufacturing uses EAMs in several of its financial systems to capture material transactions. During this year's annual financial audit, the external auditors noticed unusually large gaps in dates of the captured transactions being copied to the audit files. Baker Manufacturing management informed the auditors that the increased transaction processing times caused by the EAMs had forced computer operators to turn off the EAMs to allow the processing of important transactions in a timely fashion. In addition, much maintenance had been performed on key applications during the past year. Required: Outline any potential risks and determine the courses of action the external auditors should follow.
As a result of analytical procedures an auditor determines that gross profit has declined from 30% to 15% in the current year. The auditor should.. A. Document manamgent intentions with respect to reversing the trend. B. Evaluate managment's performance in causing the deline C. Require a footnote disclosure D. Consider the possibility of an error in the financial statements.

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