Reference no: EM13114596
Question 1. An audit client is being sued for $500,000 for discriminatory hiring practices.
Required: Indicate the appropriate action the auditor should take for each of the following independent responses to the letter of audit inquiry:
a. The lawyer stated that the client had a "meritorious defense."
b. The lawyer stated that there is only a remote chance that the client will lose. The client did not accrue any contingent loss or disclose this situation.
c. The lawyer stated the client will probably lose, and the amount of the loss could be anywhere between $250,000 and $500,000, with no amount within that range being more likely than another. The client disclosed this situation but did not accrue a loss.
d. The lawyer stated that there is a reasonable possibility that the client will lose. The client disclosed this situation but did not accrue a loss.
e. The lawyer stated the client will probably lose between $250,000 and $500,000, but most likely will lose $400,000. The client accrued a $250,000 contingent loss and disclosed the situation.
Question 2. An alfalfa co-op has an agreement with its farmers to purchase alfalfa at a price that is currently above the existing market price. In addition, the co-op has agreed to pay the farmers interest at 2% for each moth delivery is delayed beyond December 31, 2006. Management expects that at least 14,500 tons will be delivered sometime after the balance sheet date.
a. What factors should be considered in making an estimate of the loss accrual?
b. What information should management disclose in the footnotes to the financial statements concerning this purchase commitment?
|
Values of a policy
: An insurance policy sells for $1200. Based on past data, an average of 1 in 125 policy holders will file a $15000 claim, an average of 1 in 100 holders will file a claim of $40,000 and an average of 1 in 250 holders will file a claim of $80,000.
|
|
Describe what rule of the law under consideration supports
: Costello hired Sagan to drive his racing car in a race. Sagan's friend Gideon promised to pay Sagan $3,000 if she won the race, but Gideon refused to pay the $3,000. Describe what rule of the law under 'consideration' supports Gideon's claim?
|
|
Illustrate what is the purpose of sampling
: Illustrate what is the purpose of sampling? What are some concerns and dangers of sampling? How important is the sample design to data validity? Explain.
|
|
Calculate the mass of one oxygen atom
: Calculate the mass of one oxygen atom and determine the number of oxygen atoms in a 10.00g sample of the element.
|
|
What factors should be considered in making an estimate
: What factors should be considered in making an estimate of the loss accrual? What information should management disclose in the footnotes to the financial statements concerning this purchase commitment?
|
|
Use alpha to test the researcher-s theory
: With a population standard deviation of $7810. Use α = 0.01 to test the researcher's theory. Assume wages in this industry are normally distributed, determine the 99% confidence interval of the population mean.
|
|
Shape of probability distribution
: What shape would the probability distribution have for (a) completely certain returns and (b) completely uncertain returns?
|
|
Propose a staffing strategy also create a method
: What is your advice to him? Also, Propose a staffing strategy also create a method for determining whether the strategy supports the organizations overall business goals.
|
|
Number of possible passwords
: Assume that a computer password for a computer account is to consist of 2 letters followed by 2 digits. Determine the number of possible passwords in the case that repetition is permitted and in the case that repetition is not permitted.
|