EBK PRINCIPLES OF AUDITING & OTHER ASSU
21st Edition
ISBN: 9781260299434
Author: WHITTINGTON
Publisher: YUZU
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 39DOQ
To determine
Identify the appropriate answer related to the condition which could affect the perpetuity of the company.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
d. Which of the following correctly identifies a risk facing SSC that might affect Its ability to continue as a going concern over the long run?
4 of 6
Multiple Choice
Competition from several competitors.
02:16:38
Your CPA firm's decision to issue standard unmodified audit reports not mentioning the going-concern status during the past five years.
Obsolescence of all products due to rapid changes in technology in the industry.
The nature of inventory items-small in size, high in value.
Untitled docume...pdf
A Untitled docume..pdf
Untitled docume...pdf
roj....docx
Presentation se..pdf
MacBook Ai
Question 1: a. During an audit completion of a manufacturer of advanced electrical components, the auditor identified that the changes in the market resulted in a significant decrease in the demand for their products, which are now being sold significantly below cost. However, management refuses to write-off the products or to increase the reserve for obsolescence. Auditors consider that this decreasing of the inventory account was material and pervasive. b. Subsequent to the date of the FS as part of his post- balance sheet date audit procedures, a CPA learned that a recent fire caused heavy damage to one of a client's two plants; the loss will not be reimbursed by insurance. The newspapers described the event in detail. The financial statements and appended notes as prepared by the client did not disclose the loss caused by the fire. Required: For the above situation, please identify the most appropriate "type of audit opinion" that auditor would issue. Explain and write out the…
None
Chapter 10 Solutions
EBK PRINCIPLES OF AUDITING & OTHER ASSU
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prepare an example of lapping of cash receipts,...Ch. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - Prob. 14RQCh. 10 - Prob. 15RQCh. 10 - Prob. 16RQCh. 10 - Explain two procedures by which auditors may...Ch. 10 - Prob. 18RQCh. 10 - Prob. 19RQCh. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Prob. 22RQCh. 10 - Prob. 23RQCh. 10 - Prob. 24RQCh. 10 - Prob. 25RQCh. 10 - Prob. 26QRACh. 10 - Henry Mills is responsible for preparing checks,...Ch. 10 - During the first few months of the year, John...Ch. 10 - Prob. 29QRACh. 10 - Prob. 30QRACh. 10 - Prob. 31QRACh. 10 - Prob. 32QRACh. 10 - Prob. 33QRACh. 10 - Prob. 34QRACh. 10 - Prob. 35QRACh. 10 - Prob. 36QRACh. 10 - Prob. 37QRACh. 10 - Select the best answer for each of the following...Ch. 10 - Prob. 38BOQCh. 10 - Prob. 38COQCh. 10 - Prob. 38DOQCh. 10 - Prob. 38EOQCh. 10 - Prob. 38FOQCh. 10 - Reconciliation of the bank account should not be...Ch. 10 - The auditors suspect that a clients cashier is...Ch. 10 - Prob. 38IOQCh. 10 - Prob. 38JOQCh. 10 - Prob. 38KOQCh. 10 - Prob. 38LOQCh. 10 - Which of the following represents a correct...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Prob. 39DOQCh. 10 - Prob. 39EOQCh. 10 - Prob. 39FOQCh. 10 - Prob. 40OQCh. 10 - Prob. 41OQCh. 10 - Prob. 42OQCh. 10 - Prob. 43OQCh. 10 - Prob. 44OQCh. 10 - Prob. 45OQCh. 10 - Prob. 46PCh. 10 - Prob. 47PCh. 10 - Prob. 48PCh. 10 - Prob. 49PCh. 10 - Prob. 50ITCCh. 10 - Prob. 51ITCCh. 10 - Prob. 52RDCCh. 10 - Prob. 53EC
Knowledge Booster
Similar questions
- During the most recent year's audit of Pillco Corporation, the auditors have once again noted that inventory turnover is considerably slower than the industry average. Which of the following should the auditors consider doing to address this issue? O The auditors should consider issuing a qualified opinion on the client's inventory accounts in order to draw attention to this issue. O The auditors should consider making reference to this in the management representation letter, to ensure client management is appropriately aware of this issue. O The auditors should consider requesting the client formulate note disclosure in the financial statements, specifically addressing this issue. O None of these answer choices are correct.arrow_forwarda) Assume auditor has found that the clients inventory becomes obsolete very quickly. Will the auditor set inherent risk high or low? Also explain after setting the inherent risk what additional measures auditor can take regarding audit of inventory in this case. b) Materiality is a relative rather than absolute concept."- explain this statement with an example. c) Though preparing engagement letter is not mandatory for an auditor, audit firms prepare engagement letter. Why?arrow_forward28. Which of the following would be a red flag that internal auditors should look at for the possibility of inventory fraud?I. The controller has assumed responsibility for approving all payments to certain vendors.II. The controller has continuously delayed installation of a new accounts payable system, despite a corporate directive to implement it.III. Sales commissions are not consistent with the organization's increased levels of sales.IV. Payments to vendors are supported by copies of receiving memos, rather than originals. Group of answer choices I and II only II and III only I, II, and IV only I, II, III, and IV I, III, and IV onlyarrow_forward
- Omitted Audit Procedures. The following are independent situations that have occurred in your public accounting firm, Arthur Hurdman7 :Case 1During the internal inspection by a regional office of Arthur Hurdman, one of its clients, Wildcat Oil Suppliers, was selected for review. The reviewers questioned the thoroughness of inventory obsolescence procedures, especially in light of the depressed state of the oil exploration industry at the time. They believed that specific substantive procedures, whichthey considered appropriate, were not performed by your audit team.Case 2Top Stove, one of your clients, installed an automated system in July 2017 to process part of its accounting transactions. You completed the audit of Top Stove’s December 31, 2017, statements on February 15, 2018. During the April 2018 review work on Top Stove’s firstquarter financial information, you discovered that during the audit of the 2017 statements,only the manual records had been investigated in the search for…arrow_forwardDuring a routine internal audit at a manufacturing company, the auditor discovers that the inventory records do not match the physical stock. What should the auditor's next step be to address this discrepancy? ○ A. Ignore the discrepancy as it's probably a minor error. ○ B. Investigate the discrepancy further to understand its cause and recommend corrective measures. ○ C. Adjust the records to match the physical stock without investigation. ○ D. Immediately accuse the inventory manager of fraud.arrow_forwardAn auditor is examining a nonpublic company’s inventory procurement system and has decided to perform tests of controls. Under which of the following conditions do GAAS require tests of controls be performed by an auditor?a. Significant weaknesses were found in the company’s internal control.b. The auditor hopes to reduce the amount of work to be done in assessing inherent risk.c. The auditor believes that testing the controls could lead to a reduction in overall audit time and cost.d. Tests of controls are always performed when the auditor begins to assess control risk.arrow_forward
- Which of the following timing of inventory count is the best based on the auditor’s point of view when the control risk is assessed at maximum and when there is a high inherent risk for the client? A. Inventory count just after year-endB. Inventory count at year-endC. Inventory count just before year-endD. All of the following are equal and the auditor can choose oneE. Inventory count must be done before year-end, at year-end and after year-endarrow_forwardAn audit report contains the following observations: a. A service department's location is not well suited to allow adequate service to other units. b. Employees hired for sensitive position are not subjected to background checks, c. Managers do not have access to reports that profile overall performance in relation to other benchmarked organizations, d. Management has not taken corrective action to resolve past engagement observations related to inventory controls. Which two of the above enumerated observations are most likely to indicate the existence of control weaknesses over safeguarding of assets? Please explain why?arrow_forwardRequired information Potential Misstatements in the Auditing of Inventory Read the overview below and complete the activities that follow. Because of its importance and typically high dollar value on the balance sheet of a manufacturing entity, the audit of inventory is important and often high risk. As such, auditors must take additional care when auditing this area due to the capacity for both errors and fraud. CONCEPT REVIEW: When identifying misstatements in testing inventory, it is important to consider the control environment to determine if the misstatements found are indicators of client error or intentional fraud. 1. Inventories with a high risk of 2. Purchasing and cash disbursements can provide opportunity for by employees 3. considering information about the client and its environment, the auditors must assess the risks of material misstatement related to assertions about inventory may be warranted as a signficant risk 5. 4 Audit procedures for consignment inventory could…arrow_forward
- A limitation on the scope of the auditor’s examination sufficient to preclude an unqualified opinion will always result when management... Select one: a. Refuses to furnish a management representationletter to the auditor. b. Fails to correct a reportable condition of internalcontrol that had been identified during the prioryear’s audit. c. Engages the auditor after the year-end physical inventory count is completed. d. Prevents the auditor from reviewing the workingpapers of the predecessor auditor.arrow_forwardMatch to the correct Assertions. (Each letter can be used multiple times, once, or not at all): The audit objective that all journal entries were included in the financial statements is related to which of the assertions. During an audit of inventory, it was determined some of the inventory is not owned by the company. This audit procedure most likely is intended to verify management's assertion of. Which of the following management assertions is an auditor most likely testing if the audit objective states that all expenses, such as rent and payroll, were in fact recorded on the trial balance? If an auditor is performing procedures related to the information that is contained in the client's tax footnote, he/she is most likely to obtain evidence concerning management's assertion about. The audit objective that all the transactions and accounts presented in the financial statements represent real sales is related most closely to which of the assertions.…arrow_forwardQues: 15 Due to a conflict of interest discovered between another audit firm and Jamal Corp., your firm was brought in to audit Jamal’s financial statements after the end of its fiscal year. The old firm is cooperating fully with your auditor’s and you are prepared to issue an unqualified opinion except that you could not physically count Jamal’s ending inventory. You have, however, satisfied yourself through other audit procedures that the inventory balance is fairly presented Num Types of Audit Opinion num Other Modifications A Adverse 1 Add Emphasis- of- matter paragraph to Opinion B Disclaimer 2 Add other Matter paragraph to audit opinion C Qualified 3 Add a Basis for modification other than additional paragraph D Unmodified/Unqualified 4 Make modifications other than additional paragraph 5 Make No modification to audit Opinionarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
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 Pub
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