Description of this paper

acc 555 midterm




Question;Page;1 2;1.;Question;(TCO A) Match the following definitions to the terms.;Public Company Accounting Oversight Board Auditing;Standards;Generally Accepted Auditing Standards;Statements on Auditing Standards;a. Pronouncements providing specific guidance on auditing;matters for all entities except public companies;b. The standards used for public company audits;c. Standards used by non-public companies and for interim audits for;public companies as initially adopted by the PCAOB;2.;Question;(TCO B) The following is a portion of a qualified audit;report issued for a private company;Independent Auditor's Report;To the shareholders of Tamarak Corporation;We have audited the accompanying balance sheet of Tamarak;Corporation as of October 31, 2009, and the related statements of income;retained earnings, and cash flows for the past year. These financial;statements are the responsibility of the company's management. Our;responsibility is to express an opinion on these financial statements;based on our audit.;We conducted our audit in accordance with auditing standards;generally accepted in the United States of America. Those standards;require that we plan and perform the audit to obtain reasonable assurance;about whether the financial statements are free of material misstatement.;An audit includes examining, on a test basis, evidence supporting the;amounts and disclosures in the financial statements. An audit also;includes assessing the accounting principles used and significant;estimates made by management, as well as evaluating the overall financial;statement presentation. We believe that our audit provides a reasonable;basis for our opinion.;The company has included in property and debt in the;accompanying balance sheet certain lease obligations that, in our;opinion, should be expensed in order to conform with generally accepted;accounting principles. If these lease obligations were capitalized;property would be decreased by $4,000,000, long-term debt by $2,000,000;and retained earnings by $180,000 as of October 31, 2009, and net income;and earnings per share would be decreased by $180,000 and $0.62;respectively, for the past year.;Required: Complete the above;qualified audit report by preparing the opinion paragraph. Do not date or;sign the report.;3.;Question;(TCO C) The following situation involves a possible;violation of the AICPA's Code of Professional Conduct. For each;situation, (1) determine the applicable rule number from the Code, (2);decide whether or not the Code has been violated, and (3) briefly explain;how the situation violates (or does not violate) the Code.;Your answer should be set up something like this;Rule # __________ Violation? Yes or No1 or 2 line explanation;Brad Heist, CPA, was traveling from Dallas to Houston;Texas, when he was pulled over by a police officer on suspicion of;driving under the influence. The breath-a-lyzer and a subsequent blood;test revealed that Brad was definitely impaired. He was convicted in;court of driving while under the influence of alcohol (DUI). This was;Brad's fourth conviction of DUI in less than a year, a felony under;current Texas law. Accordingly, Brad was sentenced to 18 months in;prison.;4.;Question;(TCO C) The following situation involves a possible;violation of the AICPA's Code of Professional Conduct. For each;situation, (1) determine the applicable rule number from the Code, (2);decide whether or not the Code has been violated, and (3) briefly explain;how the situation violates (or does not violate) the Code.;Your answer should be set up something like this;Rule # __________ Violation? Yes or No1 or 2 line explanation;Jim is the audit partner for the small CPA firm of Jim, CPA;PA. Jim's neighbor Duffy has a financial advisement practice whereby she;sells mutual funds to individuals for their retirement. Jim's firm is;performing the audit for a privately held company Jim's best friend;Cressy owns. Jim refers Cressy to Duffy for retirement advice. Cressy;buys 10 units of ABC Mutual Fund which generates Duffy a fat little;commission fee. Duffy buys Jim a $25 gift certificate to the local movie;theater.;Points Received;10 of 10;Comments;5.;Question;(TCO C) Brandt, CPAs has obtained Big-Bucks, a new;publicly-held client. Big-Bucks has various accounting-related needs that;Brandt, CPAs would like to fulfill. Partner-in-charge D. Brandt has;discussed with Big-Bucks the possibility of performing the annual audit;of Big-Bucks as well as preparing the tax returns, business plan;quarterly write-up services, and providing consultation on the viability;and valuation of mining gas reserves in Tennessee. An outside expert;would be hired by Brandt CPAs to provide expert advice to the CPA firm on;mining gas reserves. Additionally, Brandt, CPA's audit manager who will;be assigned to this audit has previously been approached by Big-Bucks to;come work for the company as Chief Financial Officer. The audit manager;has refused the offer, since his cousin's sister-in-law is a 10 percent;shareholder in Big-Bucks and does not want her to have any say in his;employment.;Under the Sarbanes-Oxley Act of 2002, what issues do you see;and how would you advise Brandt, CPAs? Is there ever a time when Brandt;CPAs could perform any of these services for Big-Bucks?;6.;Question;(TCO D) There are four major sources of an auditor's legal;liability. One source is liability to the audit client under common law.;Briefly summarize the other three sources.;Points Received;25 of 25;Comments;7.;Question;(TCO F) Below are 10 documents typically examined during an;audit. Classify each document as either internal or external.;Type of Document Documents;1. Canceled checks for payments of accounts;payable;2. Payroll time cards;3. Duplicate sales invoices;4. Vendors? invoices;5. Bank statements;6. Minutes of the board of directors? meetings;7. Signed lease agreements;8. Notes receivable;9. Subsidiary accounts receivable records;10. Remittance advices;8.;Question;(TCO G) Discuss the essential activities involved in the;initial planning of an audit.;Points Received;25 of 25;Comments;Page: 1 2;1. Question;(TCO F) The objective of the;ordinary audit of financial statements is the expression of an opinion on;Studentthe;fairness of the financial statements;the accuracy of the financial statements;the accuracy of the annual report;the balance sheet and income statement;Instructor;Explanation: Chapter 6, p. 134.;Points;Received: 5 of 5;Comments;2. Question;(TCO F) Which of the following;statements is most correct regarding errors and fraud?;Student;Answer: An error is unintentional, whereas fraud is;intentional.;Fraud occurs more often than errors in;financial statements.;Errors are always fraud and fraud is always;errors.;Auditors have more responsibility for finding;fraud than errors.;Instructor;Explanation: Chapter 6, p. 137.;Points;Received: 5 of 5;Comments;3. Question;(TCO F) If the auditor;believes that the financial statements are not fairly stated or is unable to;reach an conclusion because of insufficient evidence, the auditor;Student;Answer;should withdraw from the engagement;should request an increase in audit fees so;that more resources can be used to conduct the audit;has the responsibility of notifying financial;statement users through the auditor's report;should notify regulators of the circumstances;Instructor;Explanation: Chapter 6, p. 135.;Points;Received: 5 of 5;Comments;4. Question;(TCO F) Auditors accumulate;evidence to;Student;Answer;defend themselves in the event of a lawsuit;justify the conclusions they have otherwise;reached;satisfy the requirements of the Securities;Acts of 1933 and 1934;enable them to reach conclusions about the;fairness of the financial statements;Instructor;Explanation: Chapter 6, p. 134.;Points;Received: 5 of 5;Comments;5. Question;(TCO F) Which of the following;forms of evidence is most reliable?;Student;Answer;General ledger account balances;Confirmation of accounts receivable balance;received from a customer;An internal memo explaining the issuance of a;credit memo;Copy of month-end adjusting entries;Instructor;Explanation: Chapter 7, pp. 172-173.;Points;Received: 5 of 5;Comments;6. Question;(TCO F) Analytical procedures;are required during which phase(s) of the audit?;Test of Controls, Planning, Completion;Student;Answer: Yes;Yes, Yes;No, Yes, Yes;Yes, No, No;No, No, No;Instructor;Explanation: Chapter 7, pp. 170-171.;Points;Received: 5 of 5;Comments;7. Question;(TCO F) To be considered;reliable evidence, confirmations must be controlled by;Student;Answer: a;client employee responsible for accounts receivable;a financial statement auditor;a client's internal audit department;a client's controller or CFO;Instructor;Explanation: Chapter 7, pp. 168-169.;Points;Received: 5 of 5;Comments;8. Question;(TCO F) When the auditor has;reason to believe an illegal act has occurred without any corrective action;being taken, the auditor should;Student;Answer: inquire of management only at one level below;those likely to be involved with the illegality;begin communication with the FASB in;accordance with PCAOB regulations;consider accumulating additional evidence to;determine if there is actually an illegal act;consider accumulating additional evidence to;determine if there is actually an illegal act;Instructor;Explanation: Chapter 6, p. 147.;Points;Received: 0 of 5;Comments: one level below. If it was one level;above, then yes, you would have been right.;9. Question;(TCO F) Traditionally;confirmations are used to verify;Student;Answer;individual transactions between organizations, such as sales transactions;bank balances and accounts receivable;fixed asset additions;payroll expenses;Instructor;Explanation: Chapter 7, pp. 168-169.;Points;Received: 5 of 5;Comments;10. Question: (TCO G) Which of the following is;correct with respect to the use of analytical procedures?;Student;Answer;Analytical procedures may be used in evaluating balances in the testing phase;as long as the auditor also uses them in assessing the growing concern;assumption.;Analytical procedures must be used throughout;the audit.;Analytical procedures used in the testing;phase of the audit are primarily used to direct an auditor's attention so that;the auditor's understanding of the business is improved.;Analytical procedures are performed by;studying plausible relationships between financial and nonfinancial data.;Instructor;Explanation: Chapter 8, p. 208.;Points;Received: 5 of 5;Comments;11. Question: (TCO G) Which is a liquidity activity;ratio?;Student;Answer;Profit margin;Inventory turnover;Return on assets;Times interest earned;Instructor;Explanation: Chapter 8, p. 215.;Points;Received: 5 of 5;Comments;Page;1 2


Paper#51425 | Written in 18-Jul-2015

Price : $27