Reference no: EM132363311

Question

1. When performing an audit of property plant and equipment there are inherent risks to consider. Which of the following is one of those risks?

Complex accounting issues

Fraud due to lack of segregation of duties

Fraud due to assets being sold below market value

The accuracy of calculations used to compute ratios

2. Upon review of your audit findings you discover cash receipts from sales on account have been misappropriated. Which of the following internal controls may have prevented this?

Ensuring the controller sign off on all deposits

Ensuring the same person that receives the payments from customers does not enter transactions into the journal and post to the ledger

Do a background check on all accounts payable personnel before they are hired

Verify that the person who receives the payments does not also write the checks

3. Upon review of your audit findings you not a weak internal control system that allows a department supervisor to "clock in" for a fictitious employee and then approve the employee's time card at the end of the pay period. This fraud would be detected if other controls were in place, such as having an independent party:

compare the date of the recorded check in the payroll journal with the date on the canceled checks and time cards

distribute paychecks

foot the payroll journal and trace posting to the general ledger and the payroll master file

recompute hours worked from time cards

4.Different professional standards apply to different types of services offered by a CPA. Assurance services performed by a CPA would include:

Audits of financial statements

Bookkeeping and accounting system consulting services

Tax services

All of the above

5. A CPA may perform all of the following services for different clients EXCEPT:

accounting system design

audits

legal advice relating to accounting ethics violations

tax preparation

6. You are a CPA retained by the manager of a cooperative retirement village to do "write-up work". You are expected to prepare unaudited financial statements with each page marked "unaudited" and accompanied by a disclaimer of opinion stating no audit was performed. In performing the work, you discover that there are no invoices to support a claim for a $25,000 disbursement. The manager informs you that all the disbursements are proper. What should you do?

Include the unsupported disbursements in the statements since you are not performing an audit and management gave you the figures

Notify the owners that some of the claimed disbursements are unsupported and withdraw if the situation is not satisfactorily resolved

Obtain from the manager a written statement that you informed him of the missing invoices and include his assurance that the disbursements are proper

Submit the expected statements but omit $25,000 of unsupported disbursements without consulting management