Auditing and Assurance Services, Student Value Edition (16th Edition)
16th Edition
ISBN: 9780134075754
Author: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan
Publisher: PEARSON
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Question
Chapter 14, Problem 35ICA
a.
To determine
Prepare an audit file listing the nine controls.
b.
To determine
Identify the transaction-related audit objectives for each key internal control.
c.
To determine
Identify the test of control for each key internal control.
d.
To determine
Identify the substantive test of control for each key internal control.
e.
To determine
List one substantive test of transactions
f.
To determine
List one substantive test of transactions audit procedure for each transaction-related audit objective for cash disbursements.
g.
To determine
Prepare a performance audit program for acquisitions and cash disbursements using all audit procedures.
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Students have asked these similar questions
In performing a risk-based audit, when developing audit recommendations, the IT auditor should:
a) Use Computer Assisted Audit Techniques (CAATs) to test transactions.
b) Analyze the inherent risk, residual risk, and the cost of additional controls in relation to the potential for loss.
c) Determine if the risk is material based solely on auditor judgement.
d) Perform substantive procedures to eliminate control risk
Case Study: Enhancing Financial Integrity Through Comprehensive Auditing Practices
Introduction: In the rapidly evolving landscape of business and finance, the role of auditing
has become increasingly crucial. This case study delves into the scenario of a medium-sized
manufacturing company, XYZ Manufacturing Inc., that has recognized the importance of
auditing accounting practices to enhance financial integrity, compliance, and overall
organizational effectiveness.
Background: XYZ Manufacturing Inc. has been experiencing growth in its operations,
expanding its product lines and market reach. With this growth, the company's management
has identified the need for a robust auditing system to ensure accurate financial reporting,
compliance with regulatory standards, and the detection of any potential irregularities.
Auditing Objectives: The primary objectives of the auditing initiative at XYZ Manufacturing
Inc. are as follows:
Ensuring Financial Accuracy: The auditing process aims to…
After obtaining a sufficient understanding of internal control, the auditor:
a. Determines the preliminary assessment of control risk
b. Determine the assessed levels of detection risk and inherent risk
c. Assess detection risk to determine the acceptable level of inherent risk
d. Assess the need to apply GAAS
Chapter 14 Solutions
Auditing and Assurance Services, Student Value Edition (16th Edition)
Ch. 14 - Describe the following documents and records and...Ch. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Prob. 9RQCh. 14 - Prob. 10RQ
Ch. 14 - Prob. 11RQCh. 14 - Prob. 12RQCh. 14 - Prob. 13RQCh. 14 - Prob. 14RQCh. 14 - Prob. 15RQCh. 14 - Prob. 16RQCh. 14 - Prob. 17RQCh. 14 - Prob. 18RQCh. 14 - Prob. 19.3MCQCh. 14 - Prob. 19.1MCQCh. 14 - Prob. 19.2MCQCh. 14 - Prob. 20.1MCQCh. 14 - Prob. 20.2MCQCh. 14 - Prob. 20.3MCQCh. 14 - An auditor is performing substantive tests of...Ch. 14 - Prob. 21.2MCQCh. 14 - Prob. 22.1MCQCh. 14 - Prob. 22.2MCQCh. 14 - Prob. 22.3MCQCh. 14 - Prob. 23DQPCh. 14 - Prob. 24DQPCh. 14 - Prob. 25DQPCh. 14 - Prob. 26DQPCh. 14 - Prob. 27DQPCh. 14 - Prob. 28DQPCh. 14 - Prob. 29DQPCh. 14 - Prob. 30DQPCh. 14 - Prob. 31DQPCh. 14 - Prob. 32DQPCh. 14 - Prob. 33DQPCh. 14 - Prob. 34CCh. 14 - Prob. 35ICA
Knowledge Booster
Similar questions
- Which of the following internal control components involves the ongoing evaluation of the implementation and operation of internal audit? a. Monitoring Activities b. Control Environment c. Risk Assessment d. Control Activitiesarrow_forwardDuring an audit, the internal auditor should consider the following factor(s) in determining the extent to which analytical procedures should be used: a. Adequacy of the system of internal control. b. Significance of the area being examined. c. Precision with which the results of analytical audit procedures can be predicted. d. All of the above.arrow_forwardWhich of the following BEST (select one) describes why risk assessment can be viewed as the foundation of the audit function: a) Risk assessment provides a framework for allocating limited resources to achieve maximum benefits and value derived from the audit process. b) Risk assessment enables flexibility in approaching audits and the performance of control testing. c) Risk assessment enables an orderly approach to conducting audits. d) Rsk assessment provides for a measurement criteria to evaluate audit results and communicate to management.arrow_forward
- Patrick Houghton was meeting with his manager to plan audit strategy in order to determine the amount of time to spend testing the client's internal controls and conducting detailed testing of transactions and account balances. Determining the audit strategy occurs during which phase of the audit? a. client acceptance stage b. planning stage c. performing stage d. reporting stagearrow_forwardWhen testing IT controls, which of the following BEST (select one) describes the IT auditor's focus: a) Assessing the alignment of the IT controls, in relation to an industry framework. b) Assessing the design and operating effectiveness of the controls. c) Evaluating the scope and objectives of the IT controls. d) Evaluating the need for post-audit substantive testing.arrow_forwardTests of controls in a GAAS audit are required fora. Obtaining evidence about the financial statement assertions.b. Accomplishing control over the occurrence of recorded transactions.c. Applying analytical procedures to financial statement balances.d. Obtaining evidence about the operating effectiveness of client control activitiearrow_forward
- As an auditor, it is important to gain a comprehensive understanding of every aspect of a client’s internal control. This helps in evaluating control risk and preparing for the audit of the client’s financial statements. Choose one of the following questions to discuss: For what purposes should an auditor use their understanding of internal control components to plan an audit? What factors should an audit team consider when trying to reduce the planned assessed level of control risk below the maximum? What are the documentation requirements for a client’s internal control and assessed level of control risk?arrow_forwardInternal auditors would most appropriately perform which of the following activities during a review of systems development activity?a. Serve on the MIS steering committee that determines what new systems are to be developed.b. Review the methodology used to monitor and control the system development function. c. Recommend specific automated procedures to be incorporated into new systems that will provide reasonable assurance that all data submitted to an application are converted to machine-readable form.d. Recommend specific operational procedures that will ensure that all data submitted for processing are converted to machine-readable form.arrow_forwardexplain .After documenting internal control in an audit engagement, the auditor may perform tests on Those controls that the auditor plans to rely on. Those controls in which deficiencies were identified. Those controls that have a material effect on the financial statement balances. A random sample of the controls that were reviewed.arrow_forward
- Which of the following is the major purpose of performing analytical procedures in internal audits? a. To perform additional audit procedures. b. To plan the audit engagement. c. To obtain audit evidence. d. To study relationships among elements of information.arrow_forwardFor risk enabled and risk managed organizations, the conclusion on risk maturity is the first step in being able to provide assurance on risk management processes, management of key risks and reporting of risks. If Panda Company used the RBIA, then: a. The actions that are being taken to add, delete or modify existing responses where they do not currently bring risk within the risk appetite b. Agree all the risk management responses and risk management processes on which objective assurance from internal audit is required c. Produce an audit plan which lists all audits to be carried out over a specified period - usually a year. d. The internal audit activity's assurance strategy is therefore to provide assurance on these areas.arrow_forwardAssume that your audit partner has asked you to design detailed substantive testingprograms for the accounts receivable and sales; inventory; purchases and accountspayable; and payroll systems of Square Pharma. Your partner also asked you toincorporate all or some of the following types of tests: Specific analytical procedures,tests of detail (i.e. direct tests on balances and tests of transactions of a balance).While designing the testing programs, assume that the Tests of Control identifythe weaknesses as described in each of the following situations, but no other. Insummary:(a)Consider the control weaknesses for each subsystem as set out below; (b)Design and develop a substantive audit tests program using information fromlast three year annual reports and explain and justify your audit program in termsof audit objectives (also called 'audit assertions' )Note: The risk situations below are created for purposes of teaching and bear norelationship to events in Briscoe Group Ltd or any…arrow_forward
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