left to Hafford’s professional and relevant teams. Internal Control Hafford’s internal control system must be reviewed and activated. Internal control system must be audited by external auditors routinely. Feckle and his vice presidents must take any revealed weakness in external auditors’ report serious. Hiring external auditors for auditing Hafford’s internal control will ensure management that internal control system is powerful enough to find any financial problem and track its underlying reasons
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MR1) In observing the client’s annual physical inventory, the auditor’s primary objectives include; * To see to it that all inventory movements (physically or logically) are authorized. * That inventory included in the statement of financial position physically exists. * Ensure that the inventory records only include items that belong to the entity. * And that the inventory quantities have been accurately determined. * Check to see that all purchases and sales of inventory have
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undermined, which is the exact situation in the journal. To promote the independence of external auditors as well as to ensure the quality of audit services, it is significant and profound to establish an audit committee separate from management inside a company. Specifically, the audit committee is responsible for monitoring, overseeing, and evaluating the duties and responsibilities of management, internal and external auditors. Besides, regulatory environment needs to be improved. Following with SAS
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Should external/internal auditors be responsible for detecting client fraud? In 2001 Enron, the seventh largest energy company in 2001, filed for bankruptcy. The event named “Enron Scandal” is considered to be the most shocking incident in American economic history. Bring the country to the edge of disaster, the scandal was basically caused by securities fraud which Enron was charge with. The irrationality of accounting and auditing system encouraged U.S. legislative to respond the scandal, enacting
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Homework Assignment: Chapter 4, pp. 104-108: Problems 4-8, 4-18, 4-19, 4-20, 4-21 4-8) Explain how the rules concerning stock ownership apply to partners and professional staff. Give an example of when stock ownership would be prohibited for each. If the partner is part of an audit engagement, they can not own stock for the company in which they are responsible for reporting the audit for, even if the client is out of another office. The audit report must be from an individual that is independent
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if the business had an incentive for falsifying profits to the public, due to falling stock prices and other similar situations. Auditors are now utilizing computer software when it comes to some of their investigations. Access to computerized analysis of records on personal computers is causing standards to rise across the board because by using software to analyze the financial procedures, the cost on these investigations is not as high as in previous years, as less labor is involved (Hitzig
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sufficient competent evidential matter to support its audit opinion. In example of issuer A, due to deficiencies in the Firm’s testing of certain key assumptions underlying the cash flow projections, the reasonableness of the assumptions the external pricing service had used and the specialist's questions regarding the appropriateness of the weighting of the two estimates that were used to estimate the fair value, the Firm failed to obtain enough evidence to support its audit opinion. 2) The
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2-7 The Public Company Accounting Oversight Board (PCAOB) is responsible for establishing auditing standards for audits of public companies. The PCAOB was established by the Sarbanes-Oxley Act and appointed and overseen by the Securities and Exchange Commission (SEC). The Auditing Standards Board (ASB) of the AICPA is responsible for establishing auditing standards for the audits of private companies. However, prior to the SOX Act, the ASB established standards for private and public companies
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Problem 2-7 Since the Sarbanes-Oxley Act of 2002 (SOX), the PCAOB is responsible for establishing the auditing standards for public companies, whereas the AICPA (Auditing Standards Board)is responsible for private companies. Prior to the SOX, the AICPA was responsible to establish auditing standards for both private and public companies. . Problem 2-10 Although the generally accepted auditing standards are quite general, it is probably best to keep them that way rather than having specific
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Auditor’s Powers According to S.174(4) Company Act 1965, an auditor is entitled to obtain information and explanation as he desires for the purpose of audit from related company at all reasonable time through any officer, auditor and secretary and such information and explanations as he desires for the purposes of audit 1. Auditors are given a broad power to detect fraud by the management. According to Newton v Birmingham Small Arms Co Ltd2, the court observed that obtaining all information
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