chapter 6
CHAPTER 6______________________________ Planning the Audit; Linking Audit Procedures to Risk Review Questions 6-8 An audit plan provides essential background information for an audit assignment, and outlines the objectives, timing, staffing, special risks and considerations, and other requirements of the engagement. ... 6-11 Factors which may cause an audit engagement to exceed the original time estimate include the following: (1) Accounting records may not be up to date and complete. ... (6) Findings during the course of the audit may cause the client to request extension of the scope of the work. ... 6-12 Underreporting of time results in the CPA firm not billing the client for all of the time actually involved in rendering the professional services. ... 6-15 Making a proper cutoff refers to the process of assigning transactions occurring near the balance sheet date to the proper accounting period. ... 6-16 (a) The purpose of tracing journal entries forward into the ledgers is to verify the completeness of the clients posting procedures. ... 6-28 Students may arrive at a variety of estimates. ... 6-31 (a) Observation of the client’s physical inventory primarily provides evidence related to the existence assertion. ... 6-33 The solution to this question will vary with the company selected by the student. Typical business risks include: (1) Rapid pace of technology change in the industry (2) Competition (3) Changes in regulatory requirements (4) International operations (5) Internal product development (6) Changes in foreign exchange rates (7) Changes in interest rates (8) Defendant in lawsuits. (9) Changes in securities prices (10) Changes is software piracy laws (11) Changes in social, political, and economic conditions 6-36 (a) (3) An unreliable accounting system provides an opportunity for an individual to misappropriate assets. ... CHAPTER 7 Internal Control Review Questions 7-20 You should explain to the president that Statement on Auditing Standards No. ... CHAPTER 8 Consideration of Internal Control in an IT Environment Review Questions 8-10 The minimum amount of segregation of duties in an information systems department requires that programming be separate from the functions of operating the computer and controlling input to the computer. ... (6) S. Master price file—The operation below #6 include entering price data; since the first two files being accessed are the accounts receivable master file and the shipping file, this third file must include prices. ... CHAPTER 9 Audit Sampling Review Questions 9-2 Sampling risk is the possibility that the auditors will make an erroneous decision based on a sample result. ... CHAPTER 10 Cash and Financial Investments Review Questions 10-8 (a) Accounting department; (b) Accounting department; (c) Finance department; (d) Finance department; (e) Finance department. ... (6) Preparing any sales and/or sales returns and allowances records to be used in posting.