Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 41OQ
a.
To determine
Calculate the planned assessed level of control risk.
b.
To determine
Calculate the appropriate
c.
To determine
Estimate the achieved upper deviation rate and suggest the assessed level of control risk for the given circumstances.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
You are an audit supervisor of Ali & Babs partners and you are planning the audit of Little Angel Corporation, a listed company, for the year ending 31 March 2020. The company manufactures computer components and forecast profit before tax is GH¢33·6m and total assets are GH¢79·3m.Little Angel Corporation distributes its products through wholesalers as well as via its own website. The website was upgraded during the year at a cost of GH¢1·1m. Additionally, the company entered into a transaction in February to purchase a new warehouse which will cost GH¢3·2m. Little Angel Corporation’s legal advisers are working to ensure that the legalprocess will be completed by the year end. The company issued $5m of irredeemable preference shares to finance the warehouse purchase.During the year the finance director has increased the useful economic lives of fixtures and fittings from three to four years as he felt this was a more appropriate period. The finance director has informed the…
You are an audit supervisor of Ali & Babs partners and you are planning the audit of Little Angel Corporation, a listed company, for the year ending 31 March 2020. The company manufactures computer components and forecast profit before tax is GH¢33·6m and total assets are GH¢79·3m.Little Angel Corporation distributes its products through wholesalers as well as via its own website. The website was upgraded during the year at a cost of GH¢1·1m. Additionally, the company entered into a transaction in February to purchase a new warehouse which will cost GH¢3·2m. Little Angel Corporation’s legal advisers are working to ensure that the legal process will be completed by the year end. The company issued $5m of irredeemable preference shares to finance the warehouse purchase.During the year the finance director has increased the useful economic lives of fixtures and fittings from three to four years as he felt this was a more appropriate period. The finance director has informed the…
A CPA’s client, Boos & Baumkirchner, Inc., is a medium-sizemanufacturer of products for the leisure-time activities market (camping equipment,scuba gear, bows and arrows, and so forth). During the past year, a computer system wasinstalled and inventory records of finished goods and parts were converted to computerprocessing. The inventory master file is maintained on a disk. Each record of the filecontains the following information:• Item or part number • Total value of inventory on hand at cost• Description • Date of last sale or usage• Size • Quantity used or sold this year• Unit-of-measure code • Economic order quantity• Quantity on hand • Code number of major vendor• Cost per unit • Code number of secondary vendorIn preparation for year-end inventory, the client has two identical sets of preprintedinventory count cards. One set is for the client’s inventory counts, and the other is for theCPA’s use to make audit test counts. The following information is on each card:• Item or…
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
Knowledge Booster
Similar questions
- You are an audit manager of Kartey and Associates and you are planning the audit of Nayaa Systems Ltd, a listed company, for the year ending 31 December, 2020. The company manufactures computer components and forecast profit before tax is GH¢33·6m and total assets are GH¢79·3m. Nayaa Systems Ltd, distributes its products through wholesalers as well as via its own website. The website was upgraded during the year at a cost of GH¢1·1m. Additionally, the company entered into a transaction in February to purchase a new warehouse which will cost GH¢3·2m. Nayaa company’s legal advisers are working to ensure that the legal process will be completed by the year end. The company issued GHS 5m of irredeemable preference shares to finance the warehouse purchase. During the year the finance director has increased the useful economic lives of fixtures and fittings from three to four years as he felt this was a more appropriate period. The finance director has informed the engagement partner that…arrow_forwardCarosel Limited is a specialty motor vehicle parts supplier, procuring parts from a large number of suppliers. As part of the interim audit work four weeks prior to the company year’s end, you are testing the procurement/purchases systems, attending the inventory count and examining the sales and cash receipts. Purchasing/Procurement System When the quantity of a specific part falls below re-order level, an e-mail is sent to the procurement department detailing the part required and the quantity to order. Parts inventory is monitored by the store’s manager with a copy of the e-mail filed on the store manager's computer. Procurement department staff check the e-mail, allocate the order to an authorised supplier and send the order to that supplier using Electronic Data Interchange (EDI). The order is identified by a unique order number with a copy of the EDI order filed in the order database by the computer system. When goods are received at Carosel, the stores clerk confirms that…arrow_forwardCarosel Limited is a specialty motor vehicle parts supplier, procuring parts from a large number of suppliers. As part of the interim audit work four weeks prior to the company year’s end, you are testing the procurement/purchases systems, attending the inventory count and examining the sales and cash receipts. Purchasing/Procurement System When the quantity of a specific part falls below re-order level, an e-mail is sent to the procurement department detailing the part required and the quantity to order. Parts inventory is monitored by the store’s manager with a copy of the e-mail filed on the store manager's computer. Procurement department staff check the e-mail, allocate the order to an authorised supplier and send the order to that supplier using Electronic Data Interchange (EDI). The order is identified by a unique order number with a copy of the EDI order filed in the order database by the computer system. When goods are received at Carosel, the stores clerk confirms that…arrow_forward
- Carosel Limited is a specialty motor vehicle parts supplier, procuring parts from a large number of suppliers. As part of the interim audit work four weeks prior to the company year’s end, you are testing the procurement/purchases systems, attending the inventory count and examining the sales and cash receipts. Purchasing/Procurement System When the quantity of a specific part falls below re-order level, an e-mail is sent to the procurement department detailing the part required and the quantity to order. Parts inventory is monitored by the store’s manager with a copy of the e-mail filed on the store manager's computer. Procurement department staff check the e-mail, allocate the order to an authorised supplier and send the order to that supplier using Electronic Data Interchange (EDI). The order is identified by a unique order number with a copy of the EDI order filed in the order database by the computer system. When goods are received at Carosel, the stores clerk confirms that…arrow_forwardYou are auditing the financial statements of Blue Pty Ltd, a whitegoods wholesaler. You ask the audit junior to assist you to test whether or not purchases of equipment are fairly stated. You tell him that you will use dollar unit sampling. Your assistant provides you with the information in the table below. Number of purchases 6,000 Amount of purchases $6,000,000 Sample size 60 Dollar value of sample $600,000 Materiality allocated $60,000 Error found in the sample $600 REQUIRED: Draw a conclusion, on the basis of the information provided, as towhether or not purchases are fairly stated. Explain your answer and show all calculations.arrow_forwardGinnian and Fitch, a regional accounting firm, performs yearly audits on a number of different for-profit and not-for-profit entities. Two years ago, Luisa Mellina, Ginnians partner in charge of operations, became concerned about the amount of audit time required by not-for-profit entities. As a result, she instituted a series of training programs focusing on the auditing of not-forprofit entities. Now, she would like to see if the training seemed to work. So, she ran a multiple regression on 22 months of data for Ginnian for three variables: the total monthly cost of audit professional time, the number of not-for-profit audits, and the hours of training in the audit of not-for-profit entities. The following printout was obtained: Required: 1. Write out the cost equation for Ginnians audit professional time. 2. If Ginnian expects to have 9 audits of not-for-profits next month and expects that audit professionals will have a total of 130 hours of not-for-profit training, what is the anticipated cost of professional time? 3. Are the hours spent auditing not-for-profit entities positively or negatively correlated with audit professional costs? Is percentage of experienced team members positively or negatively correlated with audit professional cost? 4. What does R2 mean in this equation? Overall, what is your evaluation of the cost equation that was developed for the cost of audit professionals?arrow_forward
- Accounts Payable Confirmations. Partners Clark and Kent, both CPAs, are preparing their audit plan for the audit of accounts payable on Marlboro Corporation’s annual audit. Saturday afternoon they reviewed the thick file of last year’s documentation, and they both remembered too well the six days they spent last year on accounts payable.Last year, Clark had suggested that they mail confirmations to 100 of Marlboro’s suppliers. The company regularly purchases from about 1,000 suppliers, and these account payable balances fluctuate widely, depending on the volume of purchase and the terms Marlboro’s purchasing agent is able to negotiate. Clark’s sample of 100 was designed to include accountswith large balances. In fact, the 100 accounts confirmed last year covered 80 percent of the total dollars in accounts payable. Both Clark and Kent had spent many hours tracking down minor differences reported in confirmation responses. Nonresponding accounts were investigated by comparing Marlboro’s…arrow_forwardPlease solve this problem ASAP! Auditor You are an audit senior in Planet and Co and you are commencing the planning of the audit of this new client, Sunshine Co, for the year ending 31 August 2020. Client data A sandals manufacturer, Sunshine Company in business for 30 years, with a production facility, warehouse and administration offices operating from one central site. Sunshine sells all of its goods to large retail stores, with 60% being to one large chain store Shoetings. Sunshine has a one year contract to be the sole supplier of sandals to Shoetings. It secured the contract through significantly reducing prices and offering a four-month credit period; the company’s normal credit period is one month. Operations Two years ago Sunshine reduced the level of goods directly manufactured and instead started to import sandals from East Asia; approximately 60% is imported and 40% manufactured. Purchase orders for overseas sandals are made six months in advance and…arrow_forwardPlease solve this problem ASAP! Auditor You are an audit senior in Planet and Co and you are commencing the planning of the audit of this new client, Sunshine Co, for the year ending 31 August 2020. Client data A sandals manufacturer, Sunshine Company in business for 30 years, with a production facility, warehouse and administration offices operating from one central site. Sunshine sells all of its goods to large retail stores, with 60% being to one large chain store Shoetings. Sunshine has a one year contract to be the sole supplier of sandals to Shoetings. It secured the contract through significantly reducing prices and offering a four-month credit period; the company’s normal credit period is one month. Operations Two years ago Sunshine reduced the level of goods directly manufactured and instead started to import sandals from East Asia; approximately 60% is imported and 40% manufactured. Purchase orders for overseas sandals are made six months in advance and…arrow_forward
- The 4,000 accounts receivable of GHI Company have a total book value of $60,000. Bob Smith, Certified Public Accountant (CPA), has selected and audited a sample of 100 accounts with a total book value of $1,600. Using the mean-per-unit estimation technique, Smith has properly estimated a projected misstatement of a $8,000 overstatement for the entire population. The audited value of Smith's sample is: Multiple Choice $1,600 $1,800 $1,300 $1,400arrow_forwardUmatilla Bank and Trust is considering giving Whispering Winds Corp. a loan. Before doing so, it decides that further discussions with Whispering Winds's accountant may be desirable. One area of particular concern is the Inventory account, which has a year-end balance of $300,800. Discussions with the accountant reveal the following. 1. 2. 3. 4. 5. Whispering Winds shipped goods costing $44,300 to Hemlock Company FOB shipping point on December 28. The goods are not expected to reach Hemlock until January 12. The goods were not included in the physical inventory because they were not in the warehouse. The physical count of the inventory did not include goods costing $93.500 that were shipped to Whispering Winds FOB destination on December 27 and were still in transit at year-end. Whispering Winds received goods costing $22.500 on January 2. The goods were shipped FOB shipping point on December 26 by Yanice Co. The goods were not included in the physical count. Whispering Winds shipped…arrow_forwardThe 10,000 accounts receivable of DEF Company have a total book value of $120,000. A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 and an audited value of $1,200. Using the ratio estimation technique, the estimated total audited value of the population is: 140,000 100,000 144,000 120,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,Essentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage LearningAuditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
- Cornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage LearningAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College PubSurvey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Cornerstones of Cost Management (Cornerstones Ser...
Accounting
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning