Significant deficiency and a material weakness

Reference no: EM13761284

Question 1: What is the difference between a significant deficiency and a material weakness as it relates to internal Control? How does the presence of one material deficiency affect the auditor's report on internal controls under the PCAOB standards? Likewise how does a material weakness impact the auditor's report on internal controls under the PCAOB standards?

Question 2: Conducting an audit in accordance with Generally Accepted Auditing Standards requires that the audit is properly planned, performing preliminary upfront analytical procedures, assessing the clients business risk and making sure that the auditors understand the client's business and industry.

(a) Identify and describe at least three aspects of proper audit planning and why they are important.

(b) Define what an analytical procedure is and give at least three procedures that should be performed and their purpose. For example, comparison of last year's Allowance for Doubtful Accounts to this year's Allowance for Doubtful accounts - the amount has decreased by 25%, while sales have increased by 10% from last year. How might this affect how you look at Accounts Receivables and the related Allowance for Doubtful Accounts? Would you increase or decrease your audit procedures?

(c) Why does an auditor need to understand the client's business and their industry? Provide an industry and what risks may that industry pose to our client.

Question 3: You have just been hired by a Large Regional CPA firm and you have been assigned to audit the Inventory account of $3,000,000 which represents 30% of the assets of the company. Audit standards require the auditor to consider the combined amount of misstatement early in the audit. This is known as preliminary materiality judgment.

(a) List and discuss the three main factors that affect an auditor's preliminary judgment about materiality.

(b) Would you consider the inventory account and its impact on the Balance Sheet to be an important account? If during the audit, based upon your sample of inventory you determine a "Known Misstatement" of $30,000 from sampling 100 of the 1,000 part numbers, what might be your "Most likely misstatement". (define known misstatement and likely misstatement and then apply this concept).

Question 4: Auditing standards define a confirmation as the "process of obtaining and evaluating a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions." What are the two assertions for which confirmation of accounts receivable balances provides primary evidence. Select one of the below options and EXPLAIN your reasons why you selected that option.

(a) Completeness and Valuation

(b) Valuation and Rights and Obligations.

(d) Existence and Completeness

Question 5: One of the major problems in a computer system is that incompatible functions may be performed by the same individual. Identify from the below choices the control compensating for inadequate segregation of duties in a computer system. Explain why you have selected your response.

(a) Echo Checks

(b) A check digit system

(d) A computer access log

Question 6: You are the Senior Auditor for WWZ Co. and you have completed the testing of all the accounts. However, prior to issuing your report, what are at least five other procedures or reviews that must be performed prior to issuing your report? Explain your responses

Reference no: EM13761284

Questions Cloud

Determine the ideal market exposure : Determine the Ideal Market Exposure for 3 products that you identify within each of the 3 product classes. To do so, 1) identify one product, and if you wish, one brand for that product. 2) Determine which consumer product class it fits into convenie..

Marketing competitive advantage : Do an internet search and find one company that includes the sales department in the marketing department AND one company that has them separated in the organization. To do this you will likely have to explore some organizational hierarchy charts on ..

Different level of price sensitivities among customers : For a copy machine that makes 35 to 44 copies per minute, identify one or two ways to segment the market that would take advantage of different level of price sensitivities among customers. Be specific in your discussion. Be sure you tell me which va..

Enable the most communication between partners : What type of channel structure will enable the most communication between partners? Why? What type of channel structure will enable the richest (most detailed, best information) communication between partners? Why? Are your answer different or the sa..

Significant deficiency and a material weakness : What is the difference between a significant deficiency and a material weakness as it relates to internal Control? How does the presence of one material deficiency affect the auditor's report on internal controls under the PCAOB standards? Likewis..

Client seeking advice from your consulting business : Write a six to eight (6-8) page paper in which you: Create a scenario that would result in your client seeking advice from your consulting business. Create a pricing policy for the selected client and scenario. Analyze the best price setting pro..

Critical issues related to it governance-determine : Read the scenario below and identify the critical issues related to IT Governance and determine how you would resolve the issues. Write a 3 page paper that addresses the following issues:

The health care financial accounting simulation : In the simulation, you are in charge of a fictitious health care organization facing financial difficulties. You must complete the following tasks.

How might you obtain data to segment visitors : How might you obtain data to segment visitors to your city's public parks, by day of week and time of day? What would you expect to find?

User Account

All Pages