EBK AUDITING & ASSURANCE SERVICES: A SY
11th Edition
ISBN: 9781260687668
Author: Jr
Publisher: MCGRAW-HILL LEARNING SOLN.(CC)
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Chapter 14, Problem 14.9RQ
To determine
Concept Introduction:
Inventory audit: An organization may be trading or manufacturing or a service provider. Every type of organization holds some kind of inventories and inventory has the same important as of the blood in the body. Auditor’s take special care while doing inventory audit because there are high chances of misstatements in inventory transactions.
To indicate: Key segregation of duties in the inventory management process and errors or fraud in absence of this segregation.
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Why should the person who keeps the records of an asset not be the person responsible for its custody?
Decide for yourself which of the following statements is correct and which is incorrect. The separation of asset recordkeeping from asset custody aids in the reduction of fraud.
Justify why separation of roles is often referred to be the cornerstone of internal control for asset protection. Describe the consequences of having custody of and accounting for an asset by the same individual.
Chapter 14 Solutions
EBK AUDITING & ASSURANCE SERVICES: A SY
Ch. 14 - Prob. 14.1RQCh. 14 - Prob. 14.2RQCh. 14 - Prob. 14.3RQCh. 14 - Prob. 14.4RQCh. 14 - Prob. 14.5RQCh. 14 - Prob. 14.6RQCh. 14 - Prob. 14.7RQCh. 14 - Prob. 14.8RQCh. 14 - Prob. 14.9RQCh. 14 - Prob. 14.10RQ
Ch. 14 - Prob. 14.11RQCh. 14 - Prob. 14.12MCQCh. 14 - Prob. 14.13MCQCh. 14 - Prob. 14.14MCQCh. 14 - Prob. 14.15MCQCh. 14 - Prob. 14.16MCQCh. 14 - Prob. 14.17MCQCh. 14 - Prob. 14.18MCQCh. 14 - Prob. 14.19MCQCh. 14 - Prob. 14.20MCQCh. 14 - Prob. 14.21MCQCh. 14 - Prob. 14.22MCQCh. 14 - Prob. 14.23PCh. 14 - Prob. 14.24PCh. 14 - Prob. 14.25PCh. 14 - Prob. 14.26PCh. 14 - Prob. 14.27PCh. 14 - Prob. 14.28P
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- what types are frauds are possible in revenue cycle?arrow_forwardExplain why separation of duties is often described as the cornerstone of internal control forsafeguarding assets. Describe what can happen if the same person has custody of an asset andalso accounts for the asset.arrow_forwardIndicate which of the following claims is true and which is untrue. Separating asset recordkeeping from asset custody helps decrease fraud.arrow_forward
- Which one of the following is not an advantage of internal controls? Select one: a. It safeguards the assets b. It increases the chance of fraud c. It ensures compliance with laws d. It enhances the reliability of accounting recordsarrow_forwardWhy do deficiencies in internal control not always lead to material misstatement when recording transactions？arrow_forwardGive an example of fraud and error?arrow_forward
- Identify each of the following statements as either true or false. Separation of duties eliminates the possibility of collusion to steal an asset and hide the theft from the records.arrow_forwardWhat items could indicate a significant risk of fraud in the acquisition and expenditure cycle (i.e., be red flags)?arrow_forwardMay an action arising from fraud be waived? explainarrow_forward
- Errors/misstatements and fraud (meaning and characteristics)?arrow_forwardWhich one of the following fraudulent activities constitute misappropriation of assets? Omitting, advancing or delaying recognition of events and transactions Engaging in complex transactions that misrepresent the financial position of the entity. Causing an entity to pay for goods and services not received Concealing, or not disclosing, facts that could affect the recorded amounts. ENarrow_forwardHow can bookkeepers and accountants steal from a property, and what steps can be taken toprevent it?arrow_forward
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