Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
10th Edition
ISBN: 9780077732509
Author: William F Messier Jr, Steven M. Glover Associate Professor, Douglas F. Prawitt Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 16, Problem 16.24P
To determine
Concept Introduction:
Internal control is a procedure designed by a company, to ensure whether the company’s financial or operational process is done according to the company’s regulations/policies and helps to make operations more efficient and effective. For verifying the records/accuracy of the company or identify which documentation is related to whom, auditors prepare a list of questions before the audit and asked from the company’s employees and this is a process of internal control questionnaire.
To describe:The additional questions that the auditor should include in internal control questionnaire with respect to the company’s investment in debt and equity securities
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A client has a large and active investment portfolio that is kept in a bank safe deposit box. If the auditors are unable to count securities at the balance sheet date, they most likely willa. Request the bank to confirm to the auditors the contents of the safe deposit box at the balance-sheet date.b. Examine supporting evidence for transactions occurring during the year.
c. Count the securities at a subsequent date and confirm with the bank whether securities were added or removed since the balance-sheet date.d. Request the client to have the bank seal the safe deposit box until the auditors can count the securities at a subsequent date.
1. A company had excess funds at the beginning of 2021. The investment committee decided to purchase marketable securities, the sale and acquisition of investments were delegated to a certain company official. The best person to make periodic reviews of the investments activity would be the:
The investment committee
Chief operating officer
Treasurer
Corporate controller
2. During the auditor's risk assessment procedures, a meeting was held together with
the company's management. During the meeting, management has discussed that
the company recently acquired bond securities from various government agencies
and publicly listed shares. In light of this, the audit senior asked the management
about the company's investment policy, risk appetite and investment objectives. The
audit senior's inquiry would most likely address which assertion?
Rights and obligations
Occurence
Completeness
Valuation
3. The company holds bonds. The responsibility of the collection of interest and…
The auditor of Cubs obtained the following client-prepared bank reconciliation (See Image)
The following information is available:
Evan Monroe was promoted to controller on December 15, year 2; his former position was assistant controller—fixed assets.
Evan Monroe has his personal bank accounts with First Bank of Munich.
Joe Smith was hired on December 1, year 2, as a staff accountant.
Joe Smith’s prior job was with First Bank of Munich.
Cubs expects the year-end close to be complete on January 6, year 3.
The adjustments on the bank reconciliation were booked on January 30, year 3.
Required:
In the table below, identify six potential issues that the auditor might have when examining the bank reconciliation prepared by Cubs from the list provided of potential issues. An issue may be used once or not at all.
Reconciliation is not mathematically accurate.
Reconciliation balance was not properly agreed to the December 31 general ledger balance.…
Chapter 16 Solutions
Auditing & Assurance Services: A Systematic Approach (Irwin Accounting)
Ch. 16 - Prob. 16.1RQCh. 16 - Prob. 16.2RQCh. 16 - Prob. 16.3RQCh. 16 - Prob. 16.4RQCh. 16 - Prob. 16.5RQCh. 16 - Prob. 16.6RQCh. 16 - Prob. 16.7RQCh. 16 - Prob. 16.8RQCh. 16 - Prob. 16.9RQCh. 16 - Prob. 16.10RQ
Ch. 16 - Prob. 16.11RQCh. 16 - Prob. 16.12MCQCh. 16 - Prob. 16.13MCQCh. 16 - Prob. 16.14MCQCh. 16 - Prob. 16.15MCQCh. 16 - Prob. 16.16MCQCh. 16 - Prob. 16.17MCQCh. 16 - Prob. 16.18MCQCh. 16 - Prob. 16.19MCQCh. 16 - Prob. 16.20MCQCh. 16 - Prob. 16.21MCQCh. 16 - Prob. 16.22MCQCh. 16 - Prob. 16.23MCQCh. 16 - Prob. 16.24PCh. 16 - Prob. 16.25PCh. 16 - Prob. 16.26PCh. 16 - Prob. 16.27PCh. 16 - Prob. 16.28PCh. 16 - Prob. 16.29PCh. 16 - Prob. 16.30P
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