A client of yours, a rapidly growing retailer in New Jersey, is seeking a loan at...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
A client of yours, a rapidly growing retailer in New Jersey, is seeking a loan at the bank. The bank has informed the client that in order for the loan to be considered, the company will need a certified audit. For several years your CPA firm has been providing tax services and financial statements for this rapidly growing retailer. At the present time, there are two office personnel that handle the accounting. One. JilI, handles accounts recelvables, cash and other related matters. Rita, the second office employee, performs the inventory and accounts payable functions. The cash deposits are made by Rita. If Rita cannot make the deposit due to her absence. Jill is glad to help out and take the money to the bank. Each person has been doing the same functions for many years. Both individuals are considered to be competent in their positions. The owner has not bonded either employee and has complete trust in their honesty. The financial information is summarized each month by the company's owner and sent to the CPA firm for the preparation of financial statements and tax returns. The company's owner is not an accountant. but prides himself on obtaining an "A" In his high school bookkeeping class that he took before personal computers were invented. Discuss in two or three paragraphs if internal controls in this scenario are adequate for the rendering of a certified opinion? What recommendations would you make in order to increase the use of internal controls in this area? Assuming that internal controls are not adequate in this area, comment on what the auditor should tell the client? A client of yours, a rapidly growing retailer in New Jersey, is seeking a loan at the bank. The bank has informed the client that in order for the loan to be considered, the company will need a certified audit. For several years your CPA firm has been providing tax services and financial statements for this rapidly growing retailer. At the present time, there are two office personnel that handle the accounting. One. JilI, handles accounts recelvables, cash and other related matters. Rita, the second office employee, performs the inventory and accounts payable functions. The cash deposits are made by Rita. If Rita cannot make the deposit due to her absence. Jill is glad to help out and take the money to the bank. Each person has been doing the same functions for many years. Both individuals are considered to be competent in their positions. The owner has not bonded either employee and has complete trust in their honesty. The financial information is summarized each month by the company's owner and sent to the CPA firm for the preparation of financial statements and tax returns. The company's owner is not an accountant. but prides himself on obtaining an "A" In his high school bookkeeping class that he took before personal computers were invented. Discuss in two or three paragraphs if internal controls in this scenario are adequate for the rendering of a certified opinion? What recommendations would you make in order to increase the use of internal controls in this area? Assuming that internal controls are not adequate in this area, comment on what the auditor should tell the client?
Expert Answer:
Related Book For
Accounting Information Systems
ISBN: 9780132871938
11th edition
Authors: George H. Bodnar, William S. Hopwood
Posted Date:
Students also viewed these accounting questions
-
In order for behavior interventions to be considered truly successful, students must be able to generalize or apply newly learned behaviors in different environments. Choose a replacement behavior...
-
A client of yours is seeking your help in understanding a number of issues involving various aspects of a partnership. The business under consideration is a manufacturer of custom fabricated steel...
-
Your international company headquartered in New Jersey is sending an expatriate to China for a three-year assignment to staff up and run a new branch of its industrial products business. The main...
-
Secondary xylem and phloem in dicot stem are produced by (a) Phellogen (b) Apical meristems (c) Axillary meristems (d) Vascular cambium
-
How can a manager make use of the eclectic decision framework?
-
Following is the June 30, 2013, statement of net position for the City of Bay Lake Water Utility Fund. Required a. For fiscal year 2014, prepare general journal entries for the Water Utility Fund...
-
The payroll disbursements were for two persons named Ciotty and Ciotti with the same first name and address. The interesting observation is that Ciotty is dated February 28, 2019, or after while...
-
Jansen Corporation shipped $20,000 of merchandise on consignment to Gooch Company. Jansen paid freight costs of $2,000. Gooch Company paid $500 for local advertising which is reimbursable from...
-
(a) Let3+ and 2 = a + bi be complex numbers. Suppose that 7 Argument = 12' find Argument(22). 7-2 (b) Let the map f: CC be defined by f(z) = Find f() if=1+2i. 1 (c) Solve the equation -12 i(9-2),...
-
As a preliminary to requesting budget estimates of sales, costs, and expenses for the fiscal year beginning January 1, 20Y9, the following tentative trial balance as of December 31, 20Y8, is prepared...
-
What information does this document reveal about the transformation of womens lives happening in the 1920s? I want a short answer that is a couple of sentences.
-
Suppose that a bond is purchased at a discount (meaning that it is sold for less than face value). Could the yield to maturity ever be less than the coupon rate? Could the rate of return be less than...
-
Suppose that the duration of trouble-free operation of a new vacuum cleaner is normally distributed with mean 500 days and a standard deviation of 81 days. The research department randomly selects 36...
-
Evaluate whether the following statements are True, False, or Uncertain. Explain your answer. You MUST provide an explanation to receive ANY marks for these questions! Moral hazard is a term used to...
-
Describe and analyze the following data, calculating elasticities. For a product, when price increases from $10 to $12, the demand increases from 200 to 225 [Calculate elasticity]; On the other hand...
-
Show that a straight supply curve going through the origin has the price elasticity of supply equals to 1 at every point. (Hint: assume a function of P=aQ+b where a>0 and b=0)
-
You just received a $200,000, 15-year mortgage with monthly payments. Your current rate on the mortgage is 4.5%. How much will you pay in interest during the second year? Year 2 Interest
-
CdF2 (s) Cd+ (aq) + 2 F- (aq) 1. A saturated solution of CdF2 is prepared. The equilibrium in the solution is represented above. In the solution [Cd+] eq = 0.0585 M and [F-] eq = 0.117 M. a....
-
Describe structured systems analysis.
-
Barbara Carson is a high- ranking officer in the Marines. She has recently been placed in charge of computer-assisted design and manufacturing for a highly classified project relating to a new high-...
-
What is normalization? Distinguish between first, second, and third normal forms.
-
The truss shown in figure 1.30 has two elements. The members are made of the aluminum hollow square cross section. The outer dimension of the square is \(12 \mathrm{~mm}\), and the inner dimension is...
-
Solve the onedimensional heat conduction problem 6 using the RayleighRitz method. For the heat conduction problem, the total potential can be defined as Use the approximate solution...
-
Consider a system of rigid bodies connected by springs as shown in figure 2.20. The bodies are assumed to move only in the horizontal direction. Further, we consider only the static problem, and...
Study smarter with the SolutionInn App