AUDITING+ASSURANCE SERVICES (LL)
11th Edition
ISBN: 9781266448119
Author: MESSIER
Publisher: MCG
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Question
Chapter 6, Problem 6.31P
a.
To determine
Concept Introduction:
To discuss:The required communication to the management assuming that both items are significant deficiencies
b.
To determine
Concept Introduction:
Audit procedure: Audit procedure is a method performed by the auditor, to gather the possible document that helps the auditors to make a strong conclusion. The audit procedure helps to determine the nature of the financial information provided by the customers and all kinds of risks that occur in the financial statements. Audit procedure performs different test of controls to avoid the risks.
To discuss: The significant deficiencies assuming that the second item was a material weakness.
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The following are various changes in audit circumstances.
Audit Circumstance
The client began experiencing an increase in returns due to product changes that resulted in increased defects.
You found several pricing errors in your substantive tests of transactions for sales.
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Post, CPA, accepted an engagement to audit the financial statements of General Co., a new client. General is a publicly held retailing entity that recently replaced its operating management. In the course of applying audit procedures, Post discovered indicators of fraud. After further investigation, they determined that a warehouse employee was stealing inventory.1) Discuss fraud materiality thresholds and explain whether the specific fraud case outlined above can be considered inconsequential.
2) Discuss Post's responsibilities regarding required communications if the fraud was determined to be:a) Clearly inconsequential.b) Not clearly inconsequential.
3) Discuss auditor obligations regarding client confidentiality and allowed disclosures relating to fraud.
28.
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 only
Chapter 6 Solutions
AUDITING+ASSURANCE SERVICES (LL)
Ch. 6 - Prob. 6.1RQCh. 6 - Prob. 6.2RQCh. 6 - Prob. 6.3RQCh. 6 - Prob. 6.4RQCh. 6 - Prob. 6.5RQCh. 6 - Prob. 6.6RQCh. 6 - Prob. 6.7RQCh. 6 - Prob. 6.8RQCh. 6 - Prob. 6.9RQCh. 6 - Prob. 6.10RQ
Ch. 6 - Prob. 6.11RQCh. 6 - Prob. 6.12MCQCh. 6 - Prob. 6.13MCQCh. 6 - Prob. 6.14MCQCh. 6 - Prob. 6.15MCQCh. 6 - Prob. 6.16MCQCh. 6 - Prob. 6.17MCQCh. 6 - Prob. 6.18MCQCh. 6 - Prob. 6.19MCQCh. 6 - Prob. 6.20MCQCh. 6 - Prob. 6.21MCQCh. 6 - Prob. 6.22MCQCh. 6 - Prob. 6.23MCQCh. 6 - Prob. 6.24MCQCh. 6 - Prob. 6.25PCh. 6 - Prob. 6.26PCh. 6 - Prob. 6.27PCh. 6 - Prob. 6.28PCh. 6 - Prob. 6.29PCh. 6 - Prob. 6.30PCh. 6 - Prob. 6.31P
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