Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements. The type of report ICFR would issue, when H, Inc., has restated previously issued financial statements to reflect the correction of misstatement.

Question

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Answer 1

Question

Chapter 7, Problem 7.38P

a

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when H, Inc., has restated previously issued financial statements to reflect the correction of misstatement.

b

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when S & H does not have effective oversight of the entity’s external financial reporting.

c

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when K has an ineffective audit committee.

d

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when the internal audit function at S, a very large manufacturing company, was ineffective.

e

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when auditors of B identified significant fraud in a financial statement by CFO.

f

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when C Company has an ineffective control environment.

g

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when there are significant deficiencies in waste disposal management and the audit committee for the last two years.

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Question 3Footfall Manufacturing Ltd. reports the following financialinformation at the end of the current year:Net Sales $100,000Debtor’s turnover ratio (based onnet sales)2Inventory turnover ratio 1.25Fixed assets turnover ratio 0.8Debt to assets ratio 0.6Net profit margin 5%Gross profit margin 25%Return on investment 2%Use the given information to fill out the templates for incomestatement and balance sheet given below:Income Statement of Footfall Manufacturing Ltd. for the year endingDecember 31, 20XX(in $)Sales 100,000Cost of goodssoldGross profitOther expensesEarnings beforetaxTax @50%Earnings aftertaxBalance Sheet of Footfall Manufacturing Ltd. as at December 31, 20XX(in $)Liabilities Amount Assets AmountEquity Net fixed assetsLong termdebt50,000 InventoryShort termdebtDebtorsCashTOTAL TOTAL

Answer 2

Question

Chapter 7, Problem 7.38P

a

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when H, Inc., has restated previously issued financial statements to reflect the correction of misstatement.

b

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when S & H does not have effective oversight of the entity’s external financial reporting.

c

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when K has an ineffective audit committee.

d

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when the internal audit function at S, a very large manufacturing company, was ineffective.

e

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when auditors of B identified significant fraud in a financial statement by CFO.

f

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when C Company has an ineffective control environment.

g

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when there are significant deficiencies in waste disposal management and the audit committee for the last two years.

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Answer 3

Question

Chapter 7, Problem 7.38P

a

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when H, Inc., has restated previously issued financial statements to reflect the correction of misstatement.

b

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when S & H does not have effective oversight of the entity’s external financial reporting.

c

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when K has an ineffective audit committee.

d

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when the internal audit function at S, a very large manufacturing company, was ineffective.

e

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when auditors of B identified significant fraud in a financial statement by CFO.

f

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when C Company has an ineffective control environment.

g

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when there are significant deficiencies in waste disposal management and the audit committee for the last two years.

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Answer 4

Question

Chapter 7, Problem 7.38P

a

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when H, Inc., has restated previously issued financial statements to reflect the correction of misstatement.

b

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when S & H does not have effective oversight of the entity’s external financial reporting.

c

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when K has an ineffective audit committee.

d

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when the internal audit function at S, a very large manufacturing company, was ineffective.

e

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when auditors of B identified significant fraud in a financial statement by CFO.

f

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when C Company has an ineffective control environment.

g

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when there are significant deficiencies in waste disposal management and the audit committee for the last two years.

Expert Solution & Answer

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Answer 5

Chapter 7, Problem 7.38P

a

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when H, Inc., has restated previously issued financial statements to reflect the correction of misstatement.

b

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when S & H does not have effective oversight of the entity’s external financial reporting.

c

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when K has an ineffective audit committee.

d

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when the internal audit function at S, a very large manufacturing company, was ineffective.

e

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when auditors of B identified significant fraud in a financial statement by CFO.

f

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when C Company has an ineffective control environment.

g

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when there are significant deficiencies in waste disposal management and the audit committee for the last two years.

Answer 6

Chapter 7, Problem 7.38P

a

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when H, Inc., has restated previously issued financial statements to reflect the correction of misstatement.

Answer 7

Chapter 7, Problem 7.38P

a

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when H, Inc., has restated previously issued financial statements to reflect the correction of misstatement.

Answer 8

b

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when S & H does not have effective oversight of the entity’s external financial reporting.

Answer 9

b

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when S & H does not have effective oversight of the entity’s external financial reporting.

Answer 10

c

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when K has an ineffective audit committee.

Answer 11

c

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when K has an ineffective audit committee.

Answer 12

d

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when the internal audit function at S, a very large manufacturing company, was ineffective.

Answer 13

d

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue, when the internal audit function at S, a very large manufacturing company, was ineffective.

Answer 14

e

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when auditors of B identified significant fraud in a financial statement by CFO.

Answer 15

e

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when auditors of B identified significant fraud in a financial statement by CFO.

Answer 16

f

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when C Company has an ineffective control environment.

Answer 17

f

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when C Company has an ineffective control environment.

Answer 18

g

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when there are significant deficiencies in waste disposal management and the audit committee for the last two years.

Answer 19

g

To determine

Introduction:

Control deficiencies evaluation: The significance of control deficiency depends on the occurrence of misstatement and degree of misstatement. A deficiency in internal control is characterized as a significant deficiency only if it leads to material misstatement, its exposure to loss or fraud in financial statements.

The type of report ICFR would issue when there are significant deficiencies in waste disposal management and the audit committee for the last two years.

Answer 20

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Answer 21

Expert Solution & Answer

Answer 22

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Answer 23

Ch. 7 - Prob. 7.1RQ Ch. 7 - Prob. 7.2RQ Ch. 7 - Prob. 7.3RQ Ch. 7 - Prob. 7.4RQ Ch. 7 - Prob. 7.5RQ Ch. 7 - Prob. 7.6RQ Ch. 7 - Prob. 7.7RQ Ch. 7 - Prob. 7.8RQ Ch. 7 - Prob. 7.9RQ Ch. 7 - Prob. 7.10RQ

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Chapter 7 Solutions