...been Enronaa’s auditor for the past 16 years. On the morning of October 23, David and his auditing team listened in on a call between stock analysts and Enronaa’s executives, who were trying to explain the company’s financial free fall. There were too many unanswered questions. After lunch, David called the entire Enronaa team together in Conference Room 37C1. His heart beat faster as he thought about the net that was closing in on Androids. As his eyes wandered around the room, on one of the conference room walls was an imposing picture of Arthur Androids. David was particularly proud of the long and distinguished history of the firm. His mind wandered as if to witness how in 1913, Arthur and Clarence, both from the audit firm of Price, bought out a small audit firm in Illinois to form Arthur, Clarence & Co., which became Androids & Co. in 1918. Androids, who headed the firm until his death in 1945, was a zealous supporter of high standards in the accounting industry. A stickler for honesty, he argued that accountants’ responsibility was to investors, not their clients’ management. During the early years, it was reputed that Androids was approached by an executive from a local rail utility to sign off on accounts containing flawed accounting, or else face the loss of a major client. Androids refused in no uncertain terms, replying that he would not sign the accounts “for all the money in America”. Leonardo Sparky, who succeeded Androids at the...
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...many unanswered questions. After lunch, David called the entire Enronaa team together in Conference Room 37C1. His heart beat faster as he thought about the net that was closing in onAndroids. As his eyes wandered around the room, on one of the conference room my team had been st i,enored. In fact, a calls were stunned b David's explanation and conference calls r called LJM2, Tom v similar troubles, ant people listening in." ally knew for certai Enronaa, he was the rd ffi i* (;/l walls was an imposing picture of Arthur Androids. David was particularly proud of the long and distinguished history of the firm. His mind wandered as if to witness how in 1913, Arthur and Clarence, both from the audit firm of Price, bought out a small audit firm in Illinois to form Arthur, Clarence & Co which becameAndroids & Co. in 1918. Androids, who headed the firm until his death in 1945, was a zealous supporter of high standards in the accounting industry. A stickler for honesty, he argued that accountants' responsibility was to investors, not their clients' management. During the early years, it was reputed that Androids was...
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...focuses on five offices of an international public accounting firm that recently made large IT investments, primarily in audit software and knowledge-sharing applications. Both qualitative and quantitative information from the research site are analyzed to estimate the change in productivity following the implementation of IT. The results from both regression analysis and Data Envelopment Analysis (DEA) indicate significant productivity gains following IT implementation, documenting the value impact of IT in a public accounting firm. Keywords: public accounting; information technology (IT); IT productivity; IT adoption; data envelopment analysis. Data Availability: The confidentiality agreement with the firm that provided the data for this study precludes revealing its identity and disseminating detailed data without its written consent. I. INTRODUCTION dvances in information technology (IT) have transformed many firms in professional services industries, but perhaps none as much as those in the public accounting industry. Once a slowpaced and conservative industry, public accounting underwent tremendous changes at the turn of the millennium, sparked largely by the rapid changes in its IT environment (Elliott 2000). Audit software and knowledge-sharing applications are two crucial components of these changes. Automation of audit tasks and use of specialized audit software has...
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...Unit: 2 The North Face Case AC503: Advanced Auditing 1. Should auditors insist that their clients accept all proposed audit adjustments, even those that have an “immaterial” effect on the given financial statements? No, if we consider overall accounting. Companies shouldn’t have to adopt an auditor’s proposal. Yes, if we consider this case with North Face. You see Crawford new Deloitte’s materiality threshold and expected them to propose adjustments but ultimately pass due to the fact there was no assumed “Immaterial” impact. However, it was later realized that Crawford did not inform the Deloitte auditors of the $2.65 million portion of the barter transaction. It safer to purpose and report then purpose and pass. 2. Should auditors take explicit measures to prevent their clients from discovering or becoming aware of the materiality thresholds used on individual audit engagements? Would it be feasible for auditors to conceal this information from their audit clients? I think so. It would avoid companies like North Face and individuals like Crawford to take advantage of these thresholds. I don’t know how feasible it would be since auditor’s live by certain standards and transparency. The goal of an auditor is to be objective and honest, by concealing materiality threshold they would doing the very thing they are trying impose. 3. Identify the general principles or guidelines that dictate when companies are entitled to record revenue. How were these principles or guidelines...
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...study focuses on five offices of an international public accounting firm that recently made large IT investments, primarily in audit software and knowledge-sharing applications. Both qualitative and quantitative information from the research site are analyzed to estimate the change in productivity following the implementation of IT. The results from both regression analysis and Data Envelopment Analysis (DEA) indicate significant productivity gains following IT implementation, documenting the value impact of IT in a public accounting firm. Keywords: public accounting; information technology (IT); IT productivity; IT adoption; data envelopment analysis. Data Availability: The confidentiality agreement with the firm that provided the data for this study precludes revealing its identity and disseminating detailed data without its written consent. I. INTRODUCTION dvances in information technology (IT) have transformed many firms in professional services industries, but perhaps none as much as those in the public accounting industry. Once a slowpaced and conservative industry, public accounting underwent tremendous changes at the turn of the millennium, sparked largely by the rapid changes in its IT environment (Elliott 2000). Audit software and knowledge-sharing applications are two crucial components of these changes. Automation of audit tasks and use of...
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...http://pcaobus.org/Standards/Auditing/Pages/default.aspx 1. After the report release date – can the auditor delete or discard or add information to the audit work papers? Information cannot be deleted or discarded from the audit work papers after the report release date, but information can be added to the work papers after the release date. 2. Certain audit matters may be documented in a central repository for the public accounting firm or in the particular office participating in the engagement. What matters may be documented in this manner and does the specific engagement’s audit documentation need to include a reference to such matters? Matters such as auditor independence, staff training and proficiency, and client acceptance and retention may be documented in a central repository. Also, yes, the specific engagement’s audit documentation needs to include a reference to the central repository if one is utilized. 3. May an auditor conduct an engagement to report on whether a previously reported material weakness continues to exist if and, if so, what are the related requirements that the auditor must comply with? An auditor may report on whether a previously reported material weakness continues to exist at a company only if all of the following conditions are met: • Management accepts responsibility for the effectiveness of internal control over financial reporting; • Management evaluates the...
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...syllabus for May 2015 examinations and onwards pursuant to enactment of the Companies Act, 2013 As students may be aware, the Companies Act, 2013 has been notified in the Official Gazette on 30th August, 2013 stating that different dates may be appointed for enforcement of different provisions of this Act through notification of the Central Government in this regard. Having regard to the above development, the Council at its 333th meeting, revised the syllabus in a comprehensive manner in the following papers of Intermediate (IPC) and Final Course(s) as annexed herewith (shown in Bold cum Italics): Intermediate (IPC) Course Paper 1: Accounting (Group I) Paper 2: Business Laws, Ethics and Communication (Group I) Paper 5: Advanced Accounting (Group II) Paper 6: Auditing and Assurance (Group II) Final Course Paper 3: Advanced Auditing and Professional Ethics (Group I) Paper 4: Corporate and Allied Laws (Group I) Director, Board of Studies Annexure SYLLABUS PAPER 1: ACCOUNTING (One paper – Three hours – 100 Marks) Level of Knowledge : Working Knowledge Objectives : (a) To lay a foundation for the preparation and presentation of financial statements, (b) To gain working knowledge of the principles and procedures of accounting and their application to different practical situations, (c) To gain the ability to solve simple problems and cases relating to sole proprietorship, partnership and companies and (d) To familiarize students with the fundamentals of computerized system of accounting...
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...Systems | Copyright © 2009, 2007 by University of Phoenix. All rights reserved. Course Description In this course, students examine the fundamentals of accounting systems design. Topics include business information systems, business processes and data flows, database concepts and tools, internal control and risks, auditing the information system, and using the information system to perform audit functions. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Course Materials Bagranoff, N. A., Simkin, M. G., & Strand Norman, C. (2008). Core concepts of accounting information systems (10th ed.). New York, NY: Wiley. Hunton, J. E., Bryant, S. M., & Bagranoff, N. A. (2004). Core concepts of information...
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...Business ACC/542 Version 3 Accounting Information Systems | Copyright © 2012, 2009, 2007 by University of Phoenix. All rights reserved. Course Description In this course, students examine the fundamentals of accounting systems design. Topics include business information systems, business processes and data flows, database concepts and tools, internal control and risks, auditing the information system, and using the information system to perform audit functions. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: University policies: You must be logged into the student website to view this document. Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Course Materials Bagranoff, N. A., Simkin, M. G., & Strand Norman, C. (2008). Core concepts of accounting information systems (10th ed.). New York, NY: Wiley. Hunton, J. E., Bryant, S. M., & Bagranoff, N. A. (2004). Core concepts of information technology auditing. Hoboken, NJ: Wiley. O’Brien, J. A. & Marakas, G. M. (2008). Management information systems (8th ed.). Boston, MA: McGraw-Hill...
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...and risks for an audit proposal. After analyzing the necessary components the team recommends that an SAS 94 audit is appropriate for Kudler. To conduct the audit the auditor will use computer assisted audit tools and techniques (CAATTs) or in Kudler’s case computer assisted audit techniques (CAATs). The following brief is an explanation of how CAATs is used to validate data and the system integrity, and explain audit productivity software. CAATs CAAT is techniques that increase the auditor’s productivity and effectiveness during the audit function. CAATTs uses tools, such as software to increase the auditor’s productivity and extract data, and analyze the data in addition to the techniques. The techniques are used to validate application integrity and verify data integrity of Kudler’s information systems. “These techniques include generating test decks of data, writing and embedding automated audit modules, and performing digital analysis and linear regression on a client’s data” (Hunton, 2004, p. 179). CAAT assists the auditor in collecting sufficient, reliable, relevant, and useful evidence that supports the planned audit objects. The Standards Board of the Information Systems Audit and Control Association (ISACA) governs the use of CAATs with Guideline 70. Guideline 70 provides guidance in the areas of planning, execution, documentation, and reporting when using CAATs. The auditor uses a decision-making process when and how to use CAATs in the audit. The process is a...
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...Information Systems Audit Information Systems Audit An information system audit examines and evaluates an organization’s information systems, practices, and operations. The audit is designed to confirm that the information system is safeguarding the organization’s assets, ensuring data integrity, and performing in an efficient way so as to meet the organization’s goals. Information system audit plans seek to evaluate the robustness of the organization’s information system. Is the system available at all times when needed by the organization? What are the security mechanisms in place to ensure confidentiality and security of data? Is the information provided by the systems accurate? Audits of information systems may be initiated to address these individual specific issues within the overall IS environment. Information Systems Audit Program The elements of an information systems audit will address the effectiveness of controls in the following general areas: * Physical and environment review that includes physical property security, power supply, air conditioning, etc. * System administration review encompassing operating systems, databases, and system administration policies and procedures. * Application software review which is an encompassing examination of the applications being used by the organization as well as the access controls, authorizations, process flows, error and exception handling, and similar activities that effect software applications including...
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...legislation, growing competition, and even medical advancements. However, the major difference between the insurance industry and all other industries is that the insurance industry accumulates cash first and pay claims costs in the future. In fact, the insurance company does not even know if a claim will occur, when a claim will occur, and how much the claim will cost. II. Insurance Industry Structure Basic Classifications There are three main types of insurance companies: life, property and liability, and title insurance companies. Companies are further divided into primary policy writing and reinsurance. Primary writing is when insurance companies issue new insurance policies and maintain those policies throughout the policy term. Reinsurance is when a primary insurance company transfers all or a portion of its risk from an insurance policy to another insurance company. Companies reinsure policies as a means of managing risk, limiting potential loses, stabilizing underwriting results, and protecting surplus revenue. For example, property and liability companies use reinsurance to avoid a heavy concentration of...
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...management team to make improvements to their existing system. Implementation of industry-specific software to improve the current AR, AP, inventory and payroll processes as well as developing new processes for sales and general ledger functions. The value-added and automation of the processes improves accuracy, eliminates double entry and allows for communication between locations. Refine the existing database with the use of flowcharts and ER diagrams to understand the flow of data and move away from broad spreadsheet reports and instead use pivot tables which will provide a summary of data useful for decision-making. Maintain, review, update, and test, policies and procedures, by means of developing good internal controls and auditing them regularly. The following brief will indicate how Kudler will also benefit from audit software and computer assisted auditing techniques (CAATs) to validate their system’s data integrity. Introduction Kudler Fine Foods (Kudler) recently upgraded their system software to be more industry-specific. Reliance on computers for accounting purposes is becoming more and more common as they are an essential tool in business. With that being said, it is imperative that management consider the validity of data and the integrity within...
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...Copyright © 2010, 2009 by University of Phoenix. All rights reserved. Course Description The ethical issues examined in the course include information privacy, accessibility, and ownership from an organizational perspective. Information laws, regulations, and compliance requirements are examined in this course as well as the considerations for creating a safe digital environment within the organization. Policies Faculty and students or learners will be held responsible for understanding and adhering to all policies contained within this syllabus and the following two additional documents: University policies: You must be logged into the student website to view this document. Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If you have recently changed modalities, read the policies governing your current class modality. Instructor policies will vary by course, so read these carefully to see what your instructor requires. Course Materials Bunting, S. (2008). EnCase® computer forensics: The official EnCE®: EnCase certified examiner...
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...EVALUATION OF REASEARCH PAPER Title: Audit Research after Sarbanes-Oxley Author: Mark L. DeFond and Jere R. Francis A. Describe the research problem or question. Evaluate the importance of the research question to audit practice. This paper attempts to stimulate research into some of the important questions implicitly raised by SOX regarding the audit profession’s potential failings. Enron’s failure and the accounting scandals at Worldcom and other companies provide compelling evidence that auditing matters and is important. However, it is unclear that whether auditing was sufficiently “broken” in the first place to warrant the radical reforms and changes effected by the SOX. The disconnection is large between the scientific evidence on audit quality and institutional changes premised on the assumption that auditing is broken. This research gives us the direction which we need to collect scientific evidence to guide public policy-making in audit. B. Explain the author’s approach to solving the problem. The authors discuss the following areas and give some suggestions for future research in each of them: 1. Why auditing matters now more than ever 2. Institutions that affect auditing 3. Engagement-specific characteristics that affect audit quality 4. The role of auditing and corporate governance 5. Audit quality and other accounting firm characteristics C. Describe the major findings of the research. 1. The criticism embodied in SOX is usually intense, and appears...
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