Professional Documents
Culture Documents
Evaluate the following question: If a CPA firm completes a nonpublic company audit of
Adam Companys financial statements following IACPA generally accepted auditing
standards and is satisfied with the results of an audit, an unmodified report may be
issued. On the other hand, if no audit is performed of the current years financial
statements, but the CPA firm has performed satisfactory audits in prior years, has
confidence in the management of the company, and makes a quick review of the current
years financial statements, a qualified report may be issued. Do you agree? Give reasons
to support your answer. Do not forget to show the necessary steps and explain how you
attained that outcome. Respond to at least two of your classmates postings.
support
Clinton
Companys
financial
statements.
The
students
followed
Jones
instructions and after two weeks gave Jones the financial statements, which did not
include any notes. Jones reviewed the statements and prepared an unqualified audit
report. The report, however, did not refer to generally accepted accounting principles.
Required:
List on the left side of a sheet of paper the generally accepted auditing standards that
were violated by Jones, and indicate how the actions of Jones resulted in a failure to
comply with each standard. Organize your answers as follows:
Generally
Accepted
Auditing
StandardsGeneral
Standards
(1) The auditor must have adequate technical training and proficiency to perform the
audit.
Actions by Jones Resulting in Failure to Comply with Generally Accepted Auditing
Standards
The best means of verification of cash, inventory, office equipment, and nearly all other
assets is a physical count of the units; only a physical count gives the auditors complete
assurance as to the accuracy of the amounts listed on the balance sheet. Evaluate this
statement. Remember to complete all parts of the problems. Do not forget to show the
necessary steps and explain how you attained that outcome. Respond to at least two of
your classmates
Complete Discuss what is meant by the phrase shopping for accounting principles.
What mechanisms have served to prevent this practice by management? Remember to
complete all parts of the problems. Do not forget to show the necessary steps and explain
how you attained that outcome. Respond to at least two of your classmates
Analytical Procedures. In a 2-3 page paper, complete the case below and submit to
instructor. Review the income statement for Uden Supply Company and answer the
following:
1. Describe the purpose of analytical procedures performed in the planning stage of
the audit.
2. Uden Supply has projected its 2004 gross profit at 31% of sales despite expectation
for some shrinkage in margins. On the basis of Udens operating performance in
years 2001 2003 project your best guess for 2004. Project 2004 based on the
incremental changes for each line item over the last three years.
3. Udens unaudited financial statements for the current year show a 31 percent gross
profit rate. Assuming that this represents a misstatement from the amount that
you developed as an expectation, calculate the estimated effect of this misstatement
on net income before taxes for 20X4.
4. Indicate whether you believe that the difference calculated in part (c) is material.
Explain your answer. (50-100 words).
Comparative income statement information for Uden Supply Company is presented in the
accompanying table.
UDEN SUPPLY COMPANY Comparative Income Statement
Years Ended December 20X1, 20X2, and 20X3 (Thousands)
13
ACC410: Auditing Online
20X1 Audited
20X2 20X3 20X4
Audited Audited
9,400 10,100 6,500 7,000 2,900 3,100
660 710
190 202 1,082 1,103 192 199 174 181 61 62 63 66 28 30 22 23
37 40
13 14 228 240
150 230
Expected
Sales 8,700
Cost of goods sold Gross profit
6,000 2,700
Sales Commissions
Advertising 175 Salaries 1,061
Payroll taxes
Employee benefits
Rent
Depreciation
Supplies
Utilities
Legal and accounting
Miscellaneous Interest expense
Net income before taxes
610
184 167 60 60 26 21
34
12 210
80
Incomes taxes 18 33 50
Net income 62 117 180
Internal Control Case. Complete Case 18-37 (p. 724-725) and submit to instructor. For
each of the following independent cases state the highest level of deficiency that you
believe the circumstances represent- -a control deficiency, a significant deficiency, or a
material weakness. Explain your decision in each case.
problems. Do not forget to show the necessary steps and explain how you attained that
outcome. Respond to at least two of your classmates
Program Comprehensive Exam. Complete the comprehensive exam, which will take
approximately one to two hours and will be graded based on your score. The full
instructions for the exam are posted in the classroom.
Harris Fell, CPA and member of the AICPA, was engaged to audit the financial statements
of Wilson Corporation. Fell had half-completed the audit when he had a dispute with the
management of Wilson Corporation and was discharged. Hal Compton, CPA, was promptly
engaged to replace Fell. Wilson Corporation did not compensate Fell for his work to date;
therefore, Fell refused to allow Wilson Corporations management to examine his working
papers. Some of the working papers consisted of adjusting journal entries and supporting
analysis. Wilson Corporations management had no other source for this information. Did
Fell violate the AICPA Code of Professional Conduct? Explain fully. Remember to complete
all parts of the problems. Do not forget to show the necessary steps and explain how you
attained that outcome. Respond to at least two of your classmates
Wade Corporation has been your audit client for several years. At the beginning of the
current year, the company changed its method of inventory valuation from average cost to
last in, first out (LIFO). The change, which had been under consideration for some time,
was in your opinion a logical and proper step for the company to take. What effect, if any,
will this situation have on your audit report for the current year? Remember to complete
all parts of the problems. Do not forget to show the necessary steps and explain how you
attained that outcome. Respond to at least two of your classmates
Make your comments as specific as possible. Rather than say look for unusual entries,
say look for entries from unusual sources and rounded amounts with focus on those near
an accounting cut off. Use precise language. Rather than saying you vouched accounts
payable, say that you looked at the item to determine that it was a bona fide business
expense. Remember to focus on the key audit objectives and support needed after
applying the audit risk model.
Remember, the purpose of the Final Paper is for you to culminate the learning achieved in
the course by describing your understanding and application of knowledge in the field of
accounting.
The Final Paper should focus on real life, real time application of topics covered in this
course; the uses you have seen and the uses you can envision. The paper must be
submitted to your instructor no later than the last day of class. Earlier submittal is
appreciated.
Writing the Final Paper
The Final Paper:
1. Must be six to ten double-spaced pages in length, and formatted according to APA
style as outlined in theAshford Writing Center.
2. Must include a title page with the following:
1.
Title of paper
2.
Students name
3.
4.
Instructors name
e. Date submitted
1. Must begin with an introductory paragraph that has a succinct thesis statement.
Complete problem below. List a represents the types of opinions the auditor ordinarily
would issue and List B represents the report modifications [if any] that would be
necessary. Select as the best answer for each situation [items 1 to 6] the type of opinion
and modifications, if any, the auditor would normally select. The types of opinions in List
A and the report modifications in List B may be selected once, more than once, or not at
all. The paper should be 2-3 pages.