AUDITING+ASSURANCE SERVICES (LL)
11th Edition
ISBN: 9781266448119
Author: MESSIER
Publisher: MCG
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Chapter 10, Problem 10.24P
To determine
Concept Introduction:
Internal control is a procedure designed by a company, to ensure whether the company’s financial or operationalprocess is done according to the company’s regulations/policies and helps to make operations moreefficient and effective. And a good performance of internal control is beneficial to make the company’s financial report more reliable.
To indicate: The audit evidence for each situation, using five-step approach.
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You are auditing a client that supplies electrical products to retail stores and electrical contractors throughout the country.The client keeps its accounts receivable records on a computer system, which is updated at the end of each business day.You plan to audit accounts receivable balance as at the end of the financial year, and you have a generalised audit software (GAS) package available to help in this task.Required:Identify ten (10) substantive audit procedures that you could perform using generalised audit software (GAS) in relation to auditing the accounts receivable account.
Various Completion Matters. For each of the following independent situations, describe the most appropriate course of action that the auditors should take.a. Drew Allison is conducting the audit of Anderson Inc. as of December 31, 2017. At the beginning of the evidence gathering, Allison becomes aware that one of Anderson’s major customers (Jones) is experiencing significant financial difficulties. Jones normally accounts for 5 percent of Anderson’s net sales. After performing the necessary procedures, Allison believes that $2.8 million of Jones’s receivable balance will ultimately become uncollectible. Allison further believes this amount is material to Anderson’s financial condition and results of operations.b. Nagan Carmelo is completing the December 31, 2017, audit of Nugget Company. As part of the final procedures, Carmelo has requested representations from Nugget’s management regarding their assertion as to the fairness of the financial statements and other important matters…
As you are planning the annual audit of Norton Corporation, you note that the company has a number of user operated computers in use in various locations. One of the machines has been installed in the stores department, which has the responsibility for disbursing stock items and for maintaining stores records. In your audit, you find that one employee receives the requisitions for stores, disburses the stock, maintains the records, operates the computer, and authorizes adjustments to the total amounts of stock recorded by the computer.
When you discuss the applicable controls with the department manager, you are told that the user operated computer is assigned exclusively to that department. Therefore, the manager contends that it does not require the same types of controls applicable to large IT systems.
a. Comment on the manager’s contention.
Chapter 10 Solutions
AUDITING+ASSURANCE SERVICES (LL)
Ch. 10 - Prob. 10.1RQCh. 10 - Prob. 10.2RQCh. 10 - Prob. 10.3RQCh. 10 - Prob. 10.4RQCh. 10 - Prob. 10.5RQCh. 10 - Prob. 10.6RQCh. 10 - Prob. 10.7RQCh. 10 - Prob. 10.8RQCh. 10 - Prob. 10.9RQCh. 10 - Prob. 10.10RQ
Ch. 10 - Prob. 10.11RQCh. 10 - Prob. 10.12MCQCh. 10 - Prob. 10.13MCQCh. 10 - Prob. 10.14MCQCh. 10 - Prob. 10.15MCQCh. 10 - Prob. 10.16MCQCh. 10 - Prob. 10.17MCQCh. 10 - Prob. 10.18MCQCh. 10 - Prob. 10.19MCQCh. 10 - Prob. 10.20MCQCh. 10 - Prob. 10.21MCQCh. 10 - Prob. 10.22MCQCh. 10 - Prob. 10.23MCQCh. 10 - Prob. 10.24PCh. 10 - Prob. 10.25PCh. 10 - Prob. 10.26PCh. 10 - Prob. 10.27PCh. 10 - Prob. 10.28PCh. 10 - Prob. 10.29PCh. 10 - Prob. 10.30P
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