Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 39RQSC
a.
To determine
Concept Introduction: The framework for ethical decision making has been developed by using the utilitarian theory and rights theory. It helps an auditor to overcome the ethical dilemma in an effective manner.
The ethical decision using the framework for ethical decision making.
b.
To determine
Concept Introduction: The framework for ethical decision making has been developed by using the utilitarian theory and rights theory. It helps an auditor to overcome the ethical dilemma in an effective manner.
The right course of action to be taken.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
You are an audit assistant within the internal audit department of Crofty, a company that manufactures household cleaning products and solutions. The company is rapidly expanding and currently employs over 2,000 staff. Turnover has increased by about 20% for the last three years, due mainly to the aggressive sales strategy employed by the sales manager. Turnover for the year ended 31 December 2020 was £100 million and profit was also high.The Crofty board of directors approved the creation of an internal audit at the beginning of 2020, to assist with the control of the company and also prepare for a possible listing on the stock exchange in 2022. The internal auditors currently report to the finance director.The CEO is keen to see the company comply with principles of good corporate governance and has requested your help with ensuring the company complies in full.Required: (a)Explain the reasons why internal auditors should or should not report their findings on internal control to the…
Nancy Watkins has been working for five (5) months as a staff member for Acme, CPAs. She iscurrently working on the audit of Tampa Manufacturing Company. She is on a four-person auditteam that is supervised by senior auditor James King.At the end of the first day of audit work, James tells the audit team that they will all have to workextra hours each day. These extra hours are to be on the audit team members’ own time to makesure that the audit comes in on budget. The team was asked to come in early, take short lunchesand stay late each day.Nancy remembered reviewing the company’s policies during her orientation. There is a policyagainst working hours and not charging them on the time report. It is considered a violation ofAcme’s employment policy. In addition, she knows that seniors are paid bonuses instead ofovertime.When discussing this issue with the other auditors on the team, Nancy finds out that James doesthis all the time. (Apparently, several other audit seniors follow the…
You are an audit supervisor of Chania & Co and are planning the audit of your client, Sitia Sparkle Co which manufactures cleaning products. Its year end was 31 July 20X6 and the draft profit before tax is $33·6 million. You are supervising a large audit team for the first time and will have specific responsibility for supervising and reviewing the work of the audit assistants in your team.
Sitia Sparkle Co purchases most of its raw materials from suppliers in Africa and these goods are shipped directly to the company’s warehouse and the goods are usually in transit for up to three weeks.
The company has incurred $1·3 million of expenditure on developing a new range of cleaning products which are due to be launched into the market place in November 20X6. In September 20X5, Sitia Sparkle Co also invested $0·9 million in a complex piece of plant and machinery as part of the development process. The full amount has been capitalised and this cost includes the purchase price,…
Chapter 1 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 1 - Prob. 1CYBKCh. 1 - Prob. 2CYBKCh. 1 - Prob. 3CYBKCh. 1 - Prob. 4CYBKCh. 1 - Prob. 5CYBKCh. 1 - Prob. 6CYBKCh. 1 - Prob. 7CYBKCh. 1 - Prob. 8CYBKCh. 1 - Prob. 9CYBKCh. 1 - Prob. 10CYBK
Ch. 1 - Prob. 11CYBKCh. 1 - Prob. 12CYBKCh. 1 - Utilitarian theory holds that what is ethical is...Ch. 1 - Prob. 14CYBKCh. 1 - Which of the following statements related to...Ch. 1 - Utilitarianism does not require which of the...Ch. 1 - Prob. 17CYBKCh. 1 - Prob. 18CYBKCh. 1 - Prob. 19CYBKCh. 1 - Which of the following factors is not an example...Ch. 1 - Prob. 1RQSCCh. 1 - Prob. 2RQSCCh. 1 - Prob. 3RQSCCh. 1 - Prob. 4RQSCCh. 1 - Prob. 5RQSCCh. 1 - Prob. 6RQSCCh. 1 - Prob. 7RQSCCh. 1 - Prob. 8RQSCCh. 1 - Prob. 9RQSCCh. 1 - Prob. 10RQSCCh. 1 - Prob. 11RQSCCh. 1 - Prob. 12RQSCCh. 1 - Prob. 13RQSCCh. 1 - Prob. 14RQSCCh. 1 - Prob. 15RQSCCh. 1 - Prob. 16RQSCCh. 1 - Prob. 17RQSCCh. 1 - Prob. 18RQSCCh. 1 - Prob. 19RQSCCh. 1 - Prob. 20RQSCCh. 1 - Prob. 21RQSCCh. 1 - Prob. 22RQSCCh. 1 - Prob. 23RQSCCh. 1 - Prob. 24RQSCCh. 1 - Prob. 25RQSCCh. 1 - Prob. 26RQSCCh. 1 - Prob. 27RQSCCh. 1 - Prob. 28RQSCCh. 1 - Prob. 29RQSCCh. 1 - Prob. 30RQSCCh. 1 - Prob. 31RQSCCh. 1 - Refer to the Why It Matters feature “What Is...Ch. 1 - Prob. 33RQSCCh. 1 - Prob. 34RQSCCh. 1 - Prob. 35RQSCCh. 1 - Prob. 36RQSCCh. 1 - Prob. 37RQSCCh. 1 - As the auditor for XYZ Company, you discover that...Ch. 1 - Prob. 39RQSCCh. 1 - Prob. 40RQSCCh. 1 - Prob. 41RQSCCh. 1 - Prob. 42RQSCCh. 1 - Prob. 43FFCh. 1 - Prob. 44FFCh. 1 - Prob. 45FFCh. 1 - Prob. 46FF
Knowledge Booster
Similar questions
- Ginnian and Fitch, a regional accounting firm, performs yearly audits on a number of different for-profit and not-for-profit entities. Two years ago, Luisa Mellina, Ginnians partner in charge of operations, became concerned about the amount of audit time required by not-for-profit entities. As a result, she instituted a series of training programs focusing on the auditing of not-forprofit entities. Now, she would like to see if the training seemed to work. So, she ran a multiple regression on 22 months of data for Ginnian for three variables: the total monthly cost of audit professional time, the number of not-for-profit audits, and the hours of training in the audit of not-for-profit entities. The following printout was obtained: Required: 1. Write out the cost equation for Ginnians audit professional time. 2. If Ginnian expects to have 9 audits of not-for-profits next month and expects that audit professionals will have a total of 130 hours of not-for-profit training, what is the anticipated cost of professional time? 3. Are the hours spent auditing not-for-profit entities positively or negatively correlated with audit professional costs? Is percentage of experienced team members positively or negatively correlated with audit professional cost? 4. What does R2 mean in this equation? Overall, what is your evaluation of the cost equation that was developed for the cost of audit professionals?arrow_forwardCharles worked at Butterfly Corporation for two years after graduating from the University of Texas. He liked his job but the firm was going through some rough times. Because the firm was losing money, Douglas, the CEO, set increasingly rigorous performance goals. Charles noticed a lot of employees were grumbling about these unrealistic expectations. He also heard rumors of quality control incidents and other problems. One day Charles was called into Douglass office. “Hello, Doug. You wanted to see me?” Charles asked. “Yes, Charles. Come in.” Doug looked grim. After Charles sat down, he began to speak. “Look, you know about the tough times we are in. We are losing money left and right. So far I’ve been able to keep this company afloat by drastically making cuts and speeding up production. I guess in all this cost-cutting, there have been problems that have come up. A lot of people have called the hotline to complain about ethical problems, such as employees cutting corners to make…arrow_forwardYou are an audit supervisor of PricewaterhouseCoopers (PwC) and are planning the audit of your client, Blister Pharmaceuticals co. which manufactures and imports sanitary and cleaning products (gloves, sanitizers, etc). Its year end was 31 July 2020 and the draft profit before tax is Rs 33.6 million. You are supervising a large audit team for the first time and will have specific responsibility for supervising and reviewing the work of the audit assistants in your team.Blister Pharmaceuticals Co purchases most of its raw materials from suppliers in Africa and these goods are shipped directly to the company's warehouse and the goods are usually in transit for up to three weeks. Due to the COVID-19 Pandemic, the company has incurred Rs 1.3 million of expenditure on developing a new range of cleaning products used for dis-infection purposes which are due to be launched into the market place in November 2020. In September 2019, Blister Pharmaceuticals co. also invested Rs 0.9 million in a…arrow_forward
- You have recently been appointed as the management accountant attached to the head office of the company with special responsibility of monitoring the performance of the companies within the group. Each company is treated as an investment center and every month produces an operating statement for the group headquarters. Summaries of the statements for companies X and Y which make similar products selling at similar prices for the last month showed a typical situation. Extract from the company monthly operating statements. X Y GHS000 GHS000 Sales 600 370 Less variable cost 229 208 Contribution 371 162 Less controllable fixed…arrow_forwardAudit Overtime. The performance evaluation of all accountants is based in part on theirability to do audit work efficiently and within the time budget planned for the engagement.New staff accountants, in particular, usually have some early difficulty learning speedywork habits, which demand that no time be wasted. Cynthia Elizabeth started work for Julieand Jacob CPAs in September. After attending the staff training school, she was assignedto the Rising Sun Company audit. Her first work assignment was to complete the extensiverecalculation of the inventory compilation using the audit test counts and audited unit pricesfor several hundred inventory items. Her time budget for the work was six hours. She startedat 4 P.M. and was not finished when everyone left the office at 6 P.M. Not wanting to stay downtown alone, she took all necessary audit documentation home. She resumed work at8 P.M. and finished at 3 A.M. The next day, she returned to the CPA offices, put the completed…arrow_forwardYou are the audit senior of Blair & Co and your team has just completed the interim audit of Chuck Industries Co, whose year end is 31 January 2012. You are in the process of reviewing the systems testing completed on the payroll cycle, as well as preparing the audit programmes for the final audit. Chuck Industries Co manufactures lights and the manufacturing process is predominantly automated; however there is a workforce of 85 employees, who monitor the machines, as well as approximately 50 employees who work in sales and administration. The company manufactures 24 hours a day seven days a week. Below is a description of the payroll system along with deficiencies identified by the audit team: Factory workforce The company operates three shifts every day with employees working eight hours each. They are required to clock in and out using an employee swipe card, which identifies the employee number and links into the hours worked report produced by the computerised payroll system.…arrow_forward
- You have recently been appointed as the accountant attached to the head office of the company with the specific responsibility of monitoring the performance of the companies within the group. Each company is treated as an investment center and every month produces an operating statement for the group headquarters. Summaries of the statements for companies A and B which make similar products selling at similar prices for the last month showed a typical situation. Extract from the company monthly operating statements. A B GHS000 GHS000 Sales 600 370 Less variable cost 229 208 Contribution 371 162 Less controllable fixed overheads…arrow_forwardBernice Mountaindog was glad to be back at Sea Shore Salt. Employees were treated well. When she had asked a year ago for a leave of absence to complete her degree in finance, top management promptly agreed. When she returned with a honors degree, she was promoted form administrative assistant (she had been secretary to Joe-Bob Brinepool, the president) to treasury analyst.Bernice thought the company’s prospect were good. Sure, table salt was a mature business, but Sea Shore Salt had grown steadily at the expense of its less well known competitors. The company’s brand name was an important advantage, despite the difficulty most customers had in pronouncing it rapidly.Bernice started work on January 2, 2009. The first 2 weeks went smoothly. Then Mr. Brinepool’s cost of capital to other managers. The memo came as a surprise to Bernice, so she stayed late to prepare for the questions that would surely come the next day. The company’s bank charged interest at current market rates, and the…arrow_forwardYou work for a firm of management consultants that offers assistance to new businesses. One of your clients is Blossom Manufacturing, a company that manufactures a small, but vital, component for the specialized lighting industry. Blossom is a new company (and a new client for your employer) and you have been assigned the task of advising it of its options for financing its inventory during the first few months. The marketing experts have told you that Blossom should have at least three months of inventory on hand so it can meet all demands from its customers. The annual production of the Blossom component is projected to be 140,400 units. Annual direct labour and direct material costs together are estimated at $351,000 per year. Variable manufacturing costs are estimated to be $210,600 per year; fixed manufacturing costs are projected to be $585,000 per year. Fixed marketing and administration costs are estimated at $819,000 per year. These projections are all for the company's first…arrow_forward
- Malone Industries has been in business for five years and has been very successful. In the past year, it expanded operations by buying Hot Metal Manufacturing for a price greater than the value of the net assets purchased. In the past year, the customer base has expanded much more than expected, and the companys owners want to increase the goodwill account. Your CPA firm has been hired to help Malone prepare year-end financial statements, and your boss has asked you to talk to Malones managers about goodwill and whether an adjustment can be made to the goodwill account. How do you respond to the owners and managers?arrow_forwardFabrication Holdings Ltd (FHL) has been a client of KEP Partners for many years. You are an audit senior and have been assigned to the FH audit for the first time for the fiscal year ended December 31, 2023. You are completing the audit planning for the property, plant, and equipment (PPE) account class, which is one of FH's most material balances. You are also aware that FH has made a large investment in a new manufacturing process to place itself in a more competitive position. Your analytical procedures indicate an increase in acquisitions of PPE. You are testing the appropriateness of the depreciation rate assigned to PPE and whether it is consistent with the present condition and expected use of the assets over their remaining life. You have sampled 35 PPE items, with a total dollar value of $1,145,000. The results show that, for the sample items, some depreciation rates were too low and/or the remaining useful life of the equipment was overstated by management. Together, these…arrow_forwardThe desire to maximize profits can work against racial and other types of discrimination. To see why, consider two equally productive accountants named Ted and Jared. Ted is black, and Jared is white. Both can complete 10 audits per month. Instructions: Enter your answers as a whole number. In part b, round your answer for profit rate to 1 decimal place. a. Suppose that for any accounting firm that hires either Ted or Jared, all the other costs of performing an audit (besides paying either Ted or Jared) come to $1,000 per audit. If the going rate that must be paid to hire an accountant is $7,000 per month, how much will it cost an accounting firm to produce one audit if it hires either Ted or Jared to do the work? $1,700 b. If the market price that accounting firms charge their clients for an audit is $1,800, what would the accounting profit per audit be for a firm that hired either Ted or Jared? $ 100 What is the profit rate as a percentage? 5.88 percent c. Suppose that firm A…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningAccounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
- Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College PubPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College