Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
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Question
Chapter 9, Problem 22MCQ
To determine
Introduction:
Revenue transaction involves exchange of goods and services for the cash payments or for credit.
To select:
Choose the correct option from the proposed statements that relates to the given condition.
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Check out a sample textbook solutionStudents have asked these similar questions
ased on an assessment of audit risk, the auditors are concerned with the following two risks:
The risk that that the client might be making duplicate payments to vendors.
The risk that the client’s accounting clerk might be making unauthorized payments to himself.
Required:
a. Assuming that the client has a manual accounting system, describe how the auditors can design a test to identify the duplicate payments and unauthorized payments.
b. Assuming that the client has an IT accounting system, describe how the auditors might use data analytic software to design a test to identify the duplicate payments and the unauthorized payments.
b. Assuming that the client has an IT accounting system, describe how the auditors might use data analytic software to design a test to identify the duplicate payments and the unauthorized payments.
Which of the following most likely would be included with the client’s confirmation letter, when an auditor decided to confirm customers’ account balances rather than individual invoices.?
Select one:
Question 28Answer
a.
A client-prepared letter reminding the customerthat a nonresponse will cause a second request tobe sent.
b.
An auditor-prepared letter explaining that a nonresponse may cause an inference that the accountbalance is correct.
c.
An auditor-prepared letter requesting the customer to supply missing and incorrect informationdirectly to the auditor.
d.
A client-prepared statement of account showingthe details of the customer’s account balance.
Based on an assessment of audit risk, the auditors are concerned with the following two risks:
The risk that that the client might be making duplicate payments to vendors.
The risk that the client’s accounting clerk might be making unauthorized payments to himself.
Required:
a. Assuming that the client has a manual accounting system, describe how the auditors can design a test to identify the duplicate payments and unauthorized payments.
b. Assuming that the client has an IT accounting system, describe how the auditors might use data analytic software to design a test to identify the duplicate payments and the unauthorized payments.
c. Describe the advantages of using data analytics software to identify unusual transactions or entries.
Chapter 9 Solutions
Auditing: A Risk Based-Approach to Conducting a Quality Audit
Ch. 9 - Prob. 1TFQCh. 9 - Prob. 2TFQCh. 9 - Prob. 3TFQCh. 9 - Prob. 4TFQCh. 9 - Prob. 5TFQCh. 9 - Prob. 6TFQCh. 9 - Prob. 7TFQCh. 9 - Prob. 8TFQCh. 9 - Prob. 9TFQCh. 9 - Prob. 10TFQ
Ch. 9 - Prob. 11TFQCh. 9 - Prob. 12TFQCh. 9 - Prob. 13TFQCh. 9 - Prob. 14TFQCh. 9 - Prob. 15TFQCh. 9 - Prob. 16TFQCh. 9 - Which of the following statements is true...Ch. 9 - Prob. 18MCQCh. 9 - Prob. 19MCQCh. 9 - Prob. 20MCQCh. 9 - Prob. 21MCQCh. 9 - Prob. 22MCQCh. 9 - Prob. 23MCQCh. 9 - Prob. 24MCQCh. 9 - Which of the following statements is false...Ch. 9 - Prob. 26MCQCh. 9 - Prob. 27MCQCh. 9 - Prob. 28MCQCh. 9 - Prob. 29MCQCh. 9 - Prob. 30MCQCh. 9 - Prob. 31MCQCh. 9 - Prob. 32MCQCh. 9 - Refer to Exhibit 9.1. Which accounts are relevant...Ch. 9 - Prob. 34RSCQCh. 9 - Prob. 35RSCQCh. 9 - An important task ¡n the audit of the revenue...Ch. 9 - Prob. 37RSCQCh. 9 - Prob. 38RSCQCh. 9 - Prob. 39RSCQCh. 9 - Prob. 40RSCQCh. 9 - Prob. 41RSCQCh. 9 - Prob. 42RSCQCh. 9 - Prob. 43RSCQCh. 9 - Prob. 45RSCQCh. 9 - Prob. 46RSCQCh. 9 - Prob. 47RSCQCh. 9 - Stainless Steel Specialties (SSS) is a...Ch. 9 - Prob. 49RSCQCh. 9 - Prob. 50RSCQCh. 9 - Prob. 51RSCQCh. 9 - Prob. 52RSCQCh. 9 - Prob. 53RSCQCh. 9 - Prob. 54RSCQCh. 9 - Prob. 55RSCQCh. 9 - Prob. 56RSCQCh. 9 - Prob. 57RSCQCh. 9 - Prob. 58RSCQCh. 9 - Prob. 59RSCQCh. 9 - Prob. 60RSCQCh. 9 - Prob. 61RSCQCh. 9 - Prob. 62RSCQCh. 9 - Prob. 63RSCQCh. 9 - Prob. 64RSCQCh. 9 - Prob. 65RSCQCh. 9 - Prob. 66RSCQCh. 9 - Prob. 67RSCQCh. 9 - Prob. 68RSCQCh. 9 - Prob. 69RSCQCh. 9 - Prob. 70RSCQCh. 9 - Prob. 71RSCQCh. 9 - Read the following scenario about Strang...Ch. 9 - Prob. 73RSCQCh. 9 - Prob. 74RSCQCh. 9 - ZYNGA (LO Z 3, 4, 5, 6, 8) Refer to the Why It...Ch. 9 - Prob. 76FFCh. 9 - UTSTARCOM, INC. (LO 2, 3, 4, 5, 6, 8) UTStarcom is...Ch. 9 - Prob. 78FFCh. 9 - Prob. 79FF
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Similar questions
- Which of the following would a fraudster perceive as a pressure? A. lack of management oversight B. everyone does it C. living beyond ones means D. lack of an internal audit functionarrow_forwardDuring the confirmation of accounts receivable, an auditor receives a confirmation via the client’s fax machine. Which of the following actions should the auditor take?a. Not accept the confirmation and select another customer’s balance to confirm.b. Not accept the confirmation and treat it as an exception.c. Accept the confirmation and file it in the working papers.d. Accept the confirmation but verify the source and content through a telephone call to the respondent.arrow_forwardAuditors must consider the possibility of fraud by employees or management on every audit engagement. They must also consider the possibility that the client has not complied with laws. (a) Distinguish between employee and management fraud. (b) Describe the auditors' responsibility for the detection of fraud in an audit. (c) Describe the auditors' responsibility regarding noncompliance with laws by a client. Essay Toolbar navigation BIUS 등등 EM EV ADarrow_forward
- Which of the following most likely would be included with the client’s confirmation letter, when an auditor decided to confirm customers’ account balances rather than individual invoices.? Select one: a. An auditor-prepared letter requesting the customer to supply missing and incorrect information directly to the auditor. b. A client-prepared letter reminding the customer that a nonresponse will cause a second request to be sent. c. A client-prepared statement of account showing the details of the customer’s account balance. d. An auditor-prepared letter explaining that a nonresponse may cause an inference that the account balance is correct.arrow_forwardQuestion 44 Audit evidence can come in different forms with different degrees of persuasiveness. Which of the following is the least persuasive type of evidence? Group of answer choices Bank statement obtained from the client. Computations made by the auditor. Prenumbered client sales invoices. Vendor's invoicearrow_forwardWhich of the following is NOT an example of externally generated evidence sent directly to the auditor? O supplier invoices O bank confirmations O payable confirmations responses to legal lettersarrow_forward
- Audit evidence can come in different forms with different degrees of reliability. Which of the following types of evidence is the least reliable?a. Invoices from suppliersb. Bank statements obtained from clientsc. The calculations made by the auditord. Sales invoice unnumberedarrow_forwardExplain why auditors usually emphasize the detection of fraud inthe audit of cash receipts. Is this consistent or inconsistent with the auditor’s responsibilityin the audit? Explain.arrow_forwardWhat are the goals of a fraud audit for internal auditors? Explain briefly.arrow_forward
- Why do auditors need to differentiate between employee and management fraud? Is it the responsibility of auditors to discover fraud?arrow_forwardAn auditor wishes to perform tests of controls on a client's cash disbursements procedures. If the control activities leave evidence, the auditor most likely will test the activities by Multiple Choice confirmation and observation. inquiry and analytical procedures. observation and inquiry. analytical procedures and confirmation. 13arrow_forwardWhich is not a forensic-type certificate? A. FASNA. B. CFE. C. CRFAC. D. MAFF. A. Gather evidence. B. Write reports. C. Assist in investigating fraud. D. All of the above may be required. Which is not a forensic-type certificate? A. FASNA. B. CFE. C. CRFAC. D. MAFF.arrow_forward
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