Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Chapter 9, Problem 31QRA
To determine
Explain whether discovery sampling would be helpful in finding out the forged checks in the given case.
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An auditor suspects that certain client
employees are ordering merchandise for
themselves over the Internet without recording
the purchase or receipt of the merchandise.
When vendors' invoices arrive, one of the
employees approves the invoices for payment.
After the invoices are paid, the employee
destroys the invoices and the related vouchers.
In gathering evidence regarding the fraud, the
auditor most likely would select items for testing
from the file of all:
Multiple Choice
Cash disbursements.
Approved vouchers.
Receiving reports.
Vendors' invoices.
Baker is an auditor for ABC Company. As part of a proactive fraud audit, Baker runs the following tests: (1) a review of the Sales Register for dormant customer accounts that posted a sale within the last two months; and (2) a comparison of the Sales Register and the Shipment Register for shipping documents that have no associated sales order. Taken together, what type of non-cash scheme is Baker most likely to find with these tests? Explain how each one might identify fraud.
Which of the following is one of the better auditing techniques to detect kiting?(1) Review composition of authenticated deposit slips.(2) Review subsequent bank statements and cancelled checks received directlyfrom the banks.(3) Prepare year-end bank reconciliations.(4) Prepare a schedule of bank transfers from the client’s books
Chapter 9 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - Prob. 9RQCh. 9 - Prob. 10RQ
Ch. 9 - Prob. 11RQCh. 9 - Prob. 12RQCh. 9 - What is a dual-purpose test?Ch. 9 - Prob. 14RQCh. 9 - Prob. 15RQCh. 9 - Prob. 16RQCh. 9 - What would be the difference between an attributes...Ch. 9 - Prob. 18RQCh. 9 - Prob. 19RQCh. 9 - Prob. 20RQCh. 9 - Prob. 21RQCh. 9 - Prob. 22RQCh. 9 - Prob. 23RQCh. 9 - Prob. 24RQCh. 9 - Prob. 25RQCh. 9 - Prob. 26RQCh. 9 - Prob. 27RQCh. 9 - Prob. 28RQCh. 9 - Prob. 29QRACh. 9 - Prob. 30QRACh. 9 - Prob. 31QRACh. 9 - Prob. 32QRACh. 9 - Prob. 33QRACh. 9 - Prob. 34QRACh. 9 - Prob. 35QRACh. 9 - Prob. 36QRACh. 9 - Prob. 37AOQCh. 9 - Prob. 37BOQCh. 9 - Prob. 37COQCh. 9 - Prob. 37DOQCh. 9 - Prob. 37EOQCh. 9 - Prob. 37FOQCh. 9 - Prob. 37GOQCh. 9 - Prob. 37HOQCh. 9 - Prob. 37IOQCh. 9 - Prob. 37JOQCh. 9 - Prob. 37KOQCh. 9 - Prob. 37LOQCh. 9 - Prob. 38OQCh. 9 - Prob. 39OQCh. 9 - For each term in the first column below, identify...Ch. 9 - Prob. 41OQCh. 9 - Smith, Inc. Rachel Robertson wishes to use...Ch. 9 - Prob. 43OQCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Prob. 46PCh. 9 - Prob. 47PCh. 9 - In the audit of Potomac Mills, the auditors wish...Ch. 9 - Prob. 49PCh. 9 - Prob. 50PCh. 9 - Prob. 51PCh. 9 - Prob. 52ITC
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- When planning to perform an audit, an accountant must have a clear understanding of audit risk and its components. The existing audit risk components consist of: 1. Control Risk 2. Detection Risk 3. Inherent Risk For each of the following situations, determine the component of audit risk that exists and explain why. 1. The client failed to find fraud committed by his employees as early as possible because the client did not reconcile the bank balance every month. 2. The auditor's confirmation of accounts receivable failed to detect material misstatements in the sales and accounts receivable accounts. 3. Procedure for disbursement of money at the client which is carried out without the approval of the authorized officialarrow_forwardYou are a forensic accountant for a public accounting firm whose client hired your team to perform a fraud investigation of the accounts payable processes. As part of your fraud testing, you have acquired vendor data including bank accounts to which payments are sent and employee data including bank accounts for direct deposit of paychecks. You need to compare the main vendor table to the main employee table to search for potential fictitious vendors. Analyze the fields in the two tables on the next page, looking for identical or similar fields. Based on what you find, identify three red flags for accounts payable fraud. Provide the record numbers from the tables in your answer. Vendor record # Employee Record# ________ ___________ ________ ____________ _________ ____________arrow_forwardYou are a forensic accountant for a public accounting firm whose client hired your team to perform a fraud investigation of the accounts payable processes. As part of your fraud testing, you have acquired vendor data including bank accounts to which payments are sent and employee data including bank accounts for direct deposit of paychecks. You need to compare the main vendor table to the main employee table to search for potential fictitious vendors. Analyze the fields in the two tables on the next page, looking for identical or similar fields. Based on what you find, identify three red flags for accounts payable fraud. Provide the record numbers from the tables in your answer. Vendor record # Employee Record# ________ ___________ ________ ____________ _________ ____________arrow_forward
- A client operates two plants. In Plant A, throughout the entire cutoff test window, all sales have been recorded as FOB shipping point. In Plant B, all sales have been recorded as FOB shipping point in the cutoff window prior to year-end and either FOB shipping point or FOB destination in the cutoff window subsequent to year end. Which plant would an auditor judge to have higher fraud risk? Question 27 options: Plant A would have higher fraudulent financial reporting risk than Plant B. Plant B would have higher risk of the misappropriation of assets than Plant A. Plant A would have higher risk of the misappropriation of assets than Plant B. Plant B would have higher fraudulent financial reporting risk than Plant A.arrow_forwardAllison Everhart, an employee in accounts payable, believes she can run a fictitious invoice through the accounts payable system and collect the money. She knows payments are subject to an audit. Which account would be the best place to hide the fraud?a. Inventory.b. Wage expense.c. Consulting service expense.d. Property tax expense.arrow_forwardWhen auditing with “fraud awareness,” auditors should especially notice and follow up employee activities under which of these conditions?a. The company always estimates the inventory but never takes a complete physical count.b. The petty cash box is always locked in the desk of the custodian.c. Management has published a company code of ethics and sends frequent communication newsletters about it.d. The board of directors reviews and approves all investment transactions.arrow_forward
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