Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Case study Lajod company has an internal audit department consisting of a manager and three staff auditors. The manger of internal audit, in turn, reports to the corporate controller. Copies of audit reports are routinely sent to the audit committee of the board of directors as well as the corporate controller and the individual responsible for the area or activity being audited. The manager of internal audits is aware that the external auditors have been relied on the internal audit function to a substantial degree in the past. However, in recent months, the external auditors have suggested there may be problem related to the objectivity of the internal audit function. This objectivity problem may result in more extensive testing and analysis by external auditors. The external auditors are concerned about the amount of non-audit work performed by the internal audit department. The percentage of non-audit work performed by the internal auditors in recent years has increased to about 25% of their total hours worked. A sample of five recent no-audit activities are as follows: 1. one of the internal auditors assisted in the preparation of policy statements on internal control. These statements included such things as policies regarding sensitive payments and standard of control for internal controls. 2. The bank statements of the corporation are reconciled each month as a regular assignment for one of the internal auditors. The corporate controller believes this strengthens internal controls because the internal auditor is not involved in the receipt and disbursement of cash. 3. The internal auditors are asked to review the budget data in every area each year for relevance and reasonableness before the budget is approved. In addition, an internal auditor examines the variances each month, along with the associated explanations. These variance analyses are prepared by the corporate controller's staff after consultation with the individuals involved. 4. One of the internal auditors has recently been involve in the design, installation, and initial operation of a new computer system. The auditor was primarily concerned with the design and implementation of internal accounting controls and the computer application controls for the new system. The auditor also conducted the testing of the controls during the test runs. 5. The internal auditors are often asked to make accounting entries foe complex transactions before the transactions are recorded. The employees in the accounting department are not adequately trained to handle such transactions. In addition, this serves as a means of maintaining internal control over complex transactions. The manger of internal audits has always made an effort to remain independent of the corporate controller's office and believes that the internal auditors are objective and independent in their audit and non-audit activities. Required . Define objectivity as it relates to the internal audit function. . For each of the five situations outlined, explain the objectivity of Lajod Company's internal audit department has been materially impaired. Consider each situation independently. . The manger of audits reports to the corporate controller. i. Does this reporting relationship result in a problem of objectivity? Explain your answer. ii. Would your answer to any of the five situations in the requirement B have changed if the manger of internal audits reported to the audit committee of the board of directors? Explain your answer.
Tanner Bay Inc. has two departments, Assembly and Packaging. The company uses a job-order costing system and computes a predetermined overhead rate in each department. What is the predetermined overhead rate to be used in each department? Show comp..
The used truck had a fair value of $6,000 on the date of the exchange. The exchange has commercial substance. At what amount should the new truck be recorded on Part's books?
Distinguish between accounting treatment for available for sale equity securities and trading equity securities with example.
During December 2008, Fashion Vixen Publishing sold 2,500 12-month annual magazine subscriptions at a rate of $30 each. The first issues were mailed in February 2009. Prepare the journal entries on Fashion Vixen's books 1) to record the sale of th..
The company requires a minimum pretax return of 13% on all investment projects. The net present value of the proposed project is closest to:
Apollo Shoes is satisfied with the services your firm offers and wants to continue with the audit. Apollo Shoes would like you to prepare a letter explaining how you plan to begin the audit process.
Prepare the following using any required worksheets, general and or adjusting journal enries, T-accounts, and trial balance per pg 212 style.
A company with $800,000 in operating assets is considering the purchase of a machine that costs $75,000 and which is expected to reduce operating costs by $20,000 each year. The payback period for this machine in years is closest to:
Eagle Corporation owns stock in Hawk Corporation and has taxable income of $233,000 for the year before considering the dividends received deduction. Hawk Corporation pays Eagle a dividend of $300,000, which was considered in calculating the $233,..
You are estimating the manufacturing hours for an airframe based on the airframe weight. The airframe you are estimating weighs 141784 pounds. Given the following equation, select the correct response from each pair.
Lenitnes Company is considering an investment in technology to improve its operations. The investment will require an initial outlay of $250,000 and will yield the following expected cash flows.
Assuming a beginning cash balance of $2,000, estimated cash receipts of $105,900, and a desired ending cash balance of $3,500, then the estimated cash disbursements are:
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd