accounting firm’s downfall. To enhance students’ appreciation of the importance of understanding an audit client’s core business strategies. To develop students’ understanding of the role of confidence, reputation, and trust both in the corporate and auditing professions. [4] [5] [6] To provide a venue for exploring professional issues relating to auditor independence and the provision of non-audit services for clients. To introduce students to the current debate on rules- versus principles-based
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Auditing Cases instructor resource Manual f our th e d itio n Mark S. Beasley Frank A. Buckless Steven M. Glover Douglas F. Prawitt do not coPy or redistribute Prentice hall Upper Saddle River, New Jersey ta b l e s e ct ion o f co n t e n t s 1 2 client acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . S o l u tionS inc lu de d in t h iS Section 1.1 Ocean Manufacturing, Inc. 3 The New Client Acceptance Decision s e ct ion Understanding
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course we have discussed some of the factors that will help the auditor evaluate inherent risk and with that the amount of sufficient and appropriate evidence needed to be collected. Below are a couple more of the more relevant ones to the Comptronix’s Case. The first factor to consider is the industry of the client’s business operations. When conducting an audit the auditor should understand the company and how day to day operations are run. Also they should understand the direct risk associated with
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AUDITING CASE STUDY ACCT: 407-01 3/31/2010 The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. Audits are performed to ascertain the validity[->0] and reliability[->1] of information; also to provide an assessment of a system's internal control[->2]. The goal of an audit is to express an opinion on the person / organization/system (etc) in question, under evaluation based on work done on a test basis. Due
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Requirements 1 What are Mark’s options? Mark is able to ask George for his plans on continuing the company for over a year. The plans must be shared in the form of a financial statement and assuming the plans are adequate, Mark can provide feedback through notes on the mitigating factors. If the disclosed information does not meet the criteria Mark was looking for then he should ask George to provide notes on the shared financial statements, which identify the doubts that he has in particular
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Audit Procedures for Account Balances Substantive procedures for disclosures and account balances are necessary to acquire enough evidence as there are many restrictions on internal controls. The auditor's judgments based on opinions when preparing risk assessment concerning the business and its scope can be a limitation to obtaining enough audit evidence (Clatworthy & Peel, 2013). Therefore, the auditor must perform essential procedures applicable in different transaction classes and account
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Auditing & assurance Case 1.2 1. Consider the principles, assumptions and constraints of Generally Accepted Accounting Principles. Define the revenue recognition principle and explain why it is important to users of financial statements. According to the revenue recognition principle, revenues are recognized when they are realized or realizable, and are earned. Thus, it does not matter when the cash is received. To break that definition down, revenues are realized when products are exchanged for
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Answers to Questions 1. The substance-over-form principle states that the true economic nature of a transaction should determine how it is reported on a company’s accounting records, rather than its legal form (Donaldson, 1964). This concept aims to undercut certain transactions such as related party transactions that are solely to distort profitability, rather than a true economic transaction between two parties. The auditor is responsible for the review and testing of the client’s accounting
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Final Exam Review Practice Case IPI Case: Required: 1. Identify Accounting System Issues * System implementation * Lack of training * I: people try to override the system, inaccurate reporting * R: The company who installed the system needs to be contacted and hold training session for employees * Glitches * I: inaccurate reporting, create room for error * R: Contact the company again and get them back and give them responsibility
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Keith Parkinson 2/3/15 Auditing Case 1: Merry-Go-Round Merry-Go-Round (MGR) is a clothing retailer that was founded in 1968. The company’s locations were in malls that targeted the youth and teen market. In the late 1980s, the company was listed by Forbes magazine as one of the top 25 companies. By the early 1990s, sales fell due to stiff competition from other retailers. Facing bankruptcy, the company hired turnaround specialists from Ernst and Young (E&Y) to help overcome the financial
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