Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented. The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

Question

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Answer 1

Question

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

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Can you solve these questions on a financial calculator: $5,000 received each year for five years on the last day of each year if your investments pay 6 percent compounded annually. $5,000 received each quarter for five years on the last day of each quarter if your investments pay 6 percent compounded quarterly.

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Answer 2

Question

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

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Answer 3

Question

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

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Answer 4

Question

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

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Answer 5

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

Answer 6

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

Answer 7

Chapter 6, Problem 6.27P

a

To determine

Introduction:

Substantive strategy: In this, the auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence, when the entity has changed its accounting system.

Answer 8

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

Answer 9

b

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The factors should be considered if the auditor is considering to engage an IT specialist, the information required to be asked to the specialist to provide.

Answer 10

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

Answer 11

c

To determine

Introduction:

Substantive strategy: In this, auditor does not rely on the entity’s internal controls instead depends on substantive procedures for evidence about the claims in the financial statements. The auditor requires minimum knowledge of the organization’s internal controls and the five components of internal control for this strategy to see if it is properly implemented.

The effect on components of the entity’s internal control when the entity changes to an IT-based accounting system.

Answer 12

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Answer 13

Expert Solution & Answer

Answer 14

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Answer 15

Ch. 6 - Prob. 6.1RQ Ch. 6 - Prob. 6.2RQ Ch. 6 - Prob. 6.3RQ Ch. 6 - Prob. 6.4RQ Ch. 6 - Prob. 6.5RQ Ch. 6 - Prob. 6.6RQ Ch. 6 - Prob. 6.7RQ Ch. 6 - Prob. 6.8RQ Ch. 6 - Prob. 6.9RQ Ch. 6 - Prob. 6.10RQ

Solution Summary: The author analyzes the factors that should be considered when deciding whether to move to a reliance strategy of sourcing audit evidence.

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Chapter 6 Solutions