Contemporary Auditing 11th edition Michael C. Knapp - Solutions

Unlock a world of knowledge with the "Contemporary Auditing 11th Edition" by Michael C. Knapp, where the complexities of auditing become manageable. Access the complete solutions manual and answers key online to guide you through each chapter with precision. Discover step-by-step answers to solved problems, and utilize the comprehensive test bank for thorough preparation. Whether you're seeking textbook insights or instructor manuals, our resources offer detailed chapter solutions. Download solutions in PDF format for free, ensuring you have the essential tools to succeed. Dive into questions and answers, and enhance your learning experience today.

Use the information related to ELM's payment and discount policy (referenced earlier) to analyze the company's discount program and late payments. All dates for payments are based off the date the customer is invoiced.Required:a. Are there any companies that made their payments after the stated due
Why is inherent risk for the existence assertion for accounts receivable often set higher than inherent risk for the completeness assertion?
How should an auditor test for proper authorization in the expenditure cycle?
Where would an auditor find the proper authorization that indicates it is okay to pay a vendor?
You are in the final stages of your audit of the financial statements of Ozine Corporation for the year ended December 31, 2017, when the corporation's president consults you. The president believes there is no point to your examining the 2015 voucher register and testing data in support of 2018
Maine Construction builds office buildings. The buildings generally cost between $5 million and $8 million to build, and the plumbing can cost between $300,000 and $600,000 depending on the building requirements. Therefore, Maine always sends theExhibit 8.51.1: Bailey Books, IncOver the past five
Why is a service expense a good account for recording a fictitious expense?
If an account payable is left off the end of the period balance, what are the possible other accounts that may be misstated?
What population of documents would an auditor examine to determine whether(a) All authorized production was completed and placed in inventory or recorded as scrap and(b) Finished goods inventory was actually produced and the costs were accounted for properly?
Why should receiving reports be pre numbered? What assertion would an auditor test using the receiving reports, and how would the auditor do this?
What characteristics should be considered in reviewing a client's inventory-taking instructions?
What is an inventory roll-forward? What roll-forward tests should be performed?
How might an auditor use a client's sales forecast for general familiarity with the production cycle or for evaluation of slow-moving inventory?
What information is used in the cost accounting department to calculate cost of goods sold for a production operation? What are the significant risks that would make this calculation inaccurate?
The balance sheet of a company lists $25 million of inventory. What assertions is management making regarding inventory?
What makes the recording of inventory at its proper amount difficult on the financial statements?
Why do auditors consider inventory errors pervasive?
What documents would a company need to correctly account for its investment securities, and what information would they obtain from these documents?
Describe the activities a company should perform to ensure appropriate reconciliation of marketable securities?
Sorenson Manufacturing Corporation was incorporated on January 3, 2016. The corporation's financial statements for its first year's operations were not examined by a CPA. You have been engaged to audit the financial statements for the year ended December 31, 2017, and your work is substantially
You have been engaged to audit the financial statements of Broad wall Corporation for the year ended December 31, 2017. During the year, Broad wall obtained a long-term loan from a local bank pursuant to a financing agreement, which provided the following:1. The loan is to be secured by the
What are some specific transactions that an auditor would expect to be approved by the board of directors? How would it affect the audit if these transactions were not required to be approved by the board?
What are auditors' responsibilities for subsequently discovered facts if these are identified(a) Prior to the audit report release date and(b) Following the audit report release date?
During the audit of the annual financial statements of Amis Manufacturing Inc., the company's president, Vance Molar, and Wanda Dweebins, the engagement partner, reviewed matters that were supposed to be included in written representations. Amis Manufacturing is a private company. Upon receipt of
Each of the following statements is a communication from management. Indicate whether the inclusion of each statement in written representations is appropriate. Provide your rationale for any statements whose inclusion in written representations is not appropriate.a. "Certain representations in
The firm of Cole & Cole, CPAs, is auditing the financial statements of Consolidated Industries Co. for the year ended December 31, 2017. On March 6, 2018, C. R. Brown, Consolidated's chief financial officer, gave the auditors a draft of an attorney letter for Cole's review before mailing it to
Aaron Rivers, CPA, is auditing the financial statements of Charger Company, a client for the past five years. During past audits of Charger, Rivers identified some immaterial misstatements (most of which relate to isolated matters and do not have common characteristics). A summary of these
Pat Colt is auditing the financial statements of Manning Company. The following is a summary of the uncorrected misstatements that Colt has identified during the past three years. These misstatements are immaterial and have related to isolated matters. In this summary, parentheses imply that the
Michael Ewing is auditing the financial statements of Dallas Company for the year ended December 31, 2017. In concluding the process of gathering sufficient appropriate evidence, Ewing has asked to meet with his supervisor on the audit (John Ross) to discuss responsibility for events occurring
The following are independent situations that have occurred in your public accounting firm, Arthur Hurdman7:Case 1During the internal inspection by a regional office of Arthur Hurdman, one of its clients, Wildcat Oil Suppliers, was selected for review. The reviewers questioned the thoroughness of
Jay Ralph completed the December 31, 2017, audit of Raider Company on February 3, 2018; Raider's financial statements and Ralph's reports on Raider's financial statements and internal control over financial reporting were released on February 12, 2018. During April 2018, Ralph's firm conducted a
For each of the following independent situations, describe the most appropriate course of action that the auditors should take.a. Drew Allison is conducting the audit of Anderson Inc. as of December 31, 2017. At the beginning of the evidence gathering, Allison becomes aware that one of Anderson's
Central City was involved in litigation brought by Mexican American Legal Defense and Educational Fund (MALDEF) over the creation of single-member voting districts (which require candidates to receive only the highest number of votes, even if not a majority) for city council positions. Auditors
What are going-concern uncertainties? What is the auditors' responsibility for evaluating going concern uncertainties?
What type of report should be issued when auditors are not independent with respect to the entity?
Assume that Stanford CPAs encountered the following issues during its various audit engagements in 2017:1. It conducted the audit of Luck, a new client this past year. Last year, Luck was audited by another CPA, who issued an unmodified opinion on its financial statements. Luck is presenting
On September 23, 2018, Betsy Ross drafted the following report on Continental Corporation's financial statements.To Whom It May Concern:We have audited the accompanying financial statements of Continental Corporation, which comprise the balance sheet as of July 31, 2018, and the related
The board of directors of Cook Industries Inc. engaged Brown & Brown, CPAs, to audit the financial statements for the year ended December 31, 2017.Independent Auditor's ReportTo the President of Cook Industries Inc.:We have audited the accompanying financial statements of Cook Industries Inc.
An assistant drafted the following auditors' report at the completion of the audit of Cramdon Inc. on March 5, 2018. The partner in charge of the engagement has decided the opinion on the 2017 financial statements should be modified only with reference to the change in the method of computing the
Following is Rex Wolf's report on Bonair Corporation's financial statements. Bonair publishes general-purpose financial statements for distribution to owners, creditors, potential investors, and the general public.Independent Auditor's ReportTo the Board of Directors and Shareholders of Bonair
Your partner drafted the following auditors' report yesterday. You need to describe the reporting deficiencies, explain the reasons for them, and discuss with the partner how the report should be corrected. You have decided to prepare a three-column worksheet showing the deficiencies, reasons, and
The following auditors' report was drafted by Quinn Moore, a staff auditor with Tyler & Tyler, CPAs, at the completion of the audit of the financial statements of Park Publishing Company for the year ended September 30, 2017. The engagement partner reviewed the audit documentation and properly
What are the major differences in the auditors' report for nonpublic and public entities?
AOW has completed the audit of the financial statements of Musgrave Company for the year ended December 31, 2017, and is now preparing the report.AOW has audited Musgrave's financial statements for several years, but this year Musgrave delayed the start of the audit work, so AOW was not present
AOW is the group auditor for the December 31, 2017, consolidated financial statements of Ferguson Company and subsidiaries. However, component auditors perform the work on certain subsidiaries for the year under audit amounting to 29 percent of total assets and 36 percent of total revenues.AOW
What makes accountants qualified to perform the assurance services discussed here?
M. Jordan & E. Stone, CPAs, audited the financial statements of Tech Company, a non issuer, for the year ended December 31, 2016, and expressed an unmodified opinion. For the next year, ended December 31, 2017, Tech issued comparative financial statements. Jordan & Stone reviewed Tech's
Dodd Manufacturing Corporation has engaged you to attest to the reasonableness of the assumptions underlying its forecast of revenues, costs, and net income for the next calendar year, 2018. Four of the assumptions follow.1. The company intends to sell certain real estate and other facilities held
Henry Horkheimer, MD, is considering expansion of his office as a result of adding a new doctor to his family medical practice. Dr. Horkheimer knows that his business is profitable, but he does not produce regular financial statements, nor does he possess the technical knowledge to do so. Although
The following abstracted report is a report on a trust fund that refers to a statutory basis of accounting (special-purpose framework) as well as to generally accepted accounting principles (GAAP).Independent Auditor’s ReportTo Natalia National Bank Association (Trustee) and the Unit Holders of
A. Jones, CPA, performed a review service for the Independence Company in 2017. He wants to present comparative financial statements. However, the 2016 statements were compiled by Able and Associates, CPAs, and Able does not want to cooperate with Jones by reissuing the prior-year compilation
Baker & Baker, CPAs, prepared the following report on the interim financial information of Micro Mini Company. The interim financial information was presented in the first quarterly report for the three-month period ended March 31, 2018. No comparative quarterly information of the first quarter
Brooklyn Life Insurance Company prepares its financial statements on a statutory basis in conformity with the accounting practices prescribed and permitted by the Insurance Department of the State of New York. This statutory basis produces financial statements that differ materially from
In 1997, a disagreement arose between Livent Inc. and its auditor, Deloitte and Touche. Livent, which operated several theaters for live stage production, had sold the naming rights to one of its theaters to AT&T for $12.5 million. The agreement was oral, and one of the theaters was under
According to the BarChris decision, how did auditors violate generally accepted auditing standards?
For what type of actions can clients bring suit against auditors under common law? What must clients prove prior to bringing suit in each case?
In terms of tort liability, what level of responsibility do auditors owe clients under common law?
Risk Capital Limited, a Delaware corporation, was considering the purchase of a substantial investment in Florida Sunshine Corporation, a closely held corporation. Initial discussions with the Florida Sunshine Corporation began late in 2017.Wilson and Wyatt, Florida Sunshine's auditor, regularly
Chriswell Corporation decided to raise additional long-term capital by issuing $20 million of 12 percent subordinated debentures to the public. May, Clark & Company, CPAs, the company's auditors, were engaged to examine the June 30, 2018, financial statements, which were included in the bond
Anderson, Olds, and Watershed (AOW) have been the independent auditors for Accord Corporation since 1990. Accord is a public entity obligated to file periodic reports under the Securities Exchange Act of 1934.Beginning in January 2017, the AOW litigation support consulting division performed a
Adam, an Illinois resident, was interested in purchasing stock in Joshua Foods Inc. Joshua Foods has corporate headquarters in Fond du Lac, Wisconsin, and is incorporated in Delaware. Adam accessed Joshua Foods' 2017 annual report including the financial statements on its corporate website. Adam
What additional defenses can accountants use in lawsuits related to compilation and review engagements?
Why is prosecution of fraud perpetrators generally a good idea?
External auditors usually calculate inventory turnover (cost of goods sold for the year divided by average inventory) and use the ratio as a broad indication of inventory age, obsolescence, or overstocking. External auditors are interested in evidence relating to the material accuracy of the
How does the scope of practice differ for governmental audits?
This module provided a detailed example of the use of sampling to determine whether individuals could reduce their resting heart rates through an aerobic exercise program.Required:Indicate whether each of the following situations reflects sampling risk (S), non sampling risk (NS), both sampling
For each of the following independent cases, identify the missing value(s).
Fournette, CPA, is studying and evaluating Tiger Inc.'s internal controls over cash disbursements. In planning the engagement, Fournette has identified the requirement that vendor invoices are authenticated (through a formal approval process) prior to being submitted for payment as a key control.
Henry, CPA, is performing substantive tests of Crimson Company's accounts receivable (which have a recorded balance of $200 million) and decided to confirm customer account balances. Because of the large number of customer balances, Henry has decided to use variables sampling and has established a
What is the ULRD? What information does the ULRD provide to the audit team?
Describe the general process used to determine the ULRD using AICPA sampling tables?
Aubrey Marblehead is conducting tests of controls on the control that quantities on Rock's receiving reports are appropriately verified. In so doing, Marblehead has inquired of Rock's receiving personnel, who said that they place a mark near the quantities verified and sign the receiving report
Your audit team has established the following parameters for the examination of ELM's control over the authorization of sales:Population size ............................... 388 shipmentsRisk of overreliance ...................................... 10%Expected population deviation rate
Your audit team has established the following parameters for the examination of ELM's control over the authorization of sales:Population size .................. 388 shipmentsRisk of overreliance ........................ 10%Expected population deviation rate ........ 1%Tolerable rate of deviation
Based on a population size of 388 shipments, a 10 percent desired risk of overreliance, an expected population deviation rate of 1 percent, and a tolerable rate of deviation of 6 percent, the audit team selected a sample of 58 items.In performing tests of controls, your audit team identified three
Define classical variables sampling and non statistical sampling. Are these methods viable options to monetary unit sampling?
The law firm of Spade & Associates hired Dylan Sayers to review the audit of the 2017 financial statements that Hammer & Wimsey, CPAs, had completed for Golden Sound and Records Company. Specifically, the attorneys engaged Sayers to determine whether the audit of Golden Sound's inventory of sound
Assume that your audit team has established the following parameters for the examination of ELM's sales transactions:LO G-3Risk of incorrect acceptance .................................................................. 10%Tolerable misstatement ... $311,711 (or 8% of the recorded balance of the
Assume that your audit team has established the following parameters for the examination of ELM's sales transactions:Risk of incorrect acceptance .................................................................. 10%Tolerable misstatement .... $389,638 (or 10% of the recorded balance of the
Assume that your audit team has established the following parameters for the examination of ELM's sales transactions:Risk of incorrect acceptance .................................................................... 10%Tolerable misstatement ... $292,229 (or 7.5% of the recorded balance of the
Assume that your audit team has received the electronic file of sales transactions from ELM and is preparing to use monetary unit sampling in evaluating the fairness of ELM's sales transactions.Required:a. How many transactions are included in ELM's sales transaction file? Using the "Field
Briefly describe how mean-per-unit estimation, ratio estimation, and difference estimation are used to provide an estimate of the recorded account balance or class of transactions?
Once the audit team estimates the balance of an account balance or class of transactions using classical variables sampling, how can they evaluate the fairness of that account balance?
Are auditors responsible for searching for fraud while "reviewing" a public company's quarterly financial statements? Explain. If so, what specific fraud risk factors should the Grant Thornton auditors have considered while performing their review of Bankrate's financial statements for the second
Define the phrase "earnings management" and distinguish between earnings management and fraudulent accounting. Under what circumstances, if any, is it acceptable for corporate executives to employ earnings management tactics? Explain.
What are the key factors that should be considered in determining whether a financial statement amount is "material"? Should auditors apply the same materiality guidelines or benchmarks as financial accountants? Defend your answer.
Identify the primary audit objectives for an accrued liability account such as Bankrate's SEM accrual. What circumstances relevant to accrued liabilities can prove to be particularly challenging for auditors?
Assuming that the SEC's allegations are true, the parties principally responsible for the Bankrate fraud were DiMaria, Gamsey, and Lerner. What other parties bear some degree of responsibility for the fraud? Defend your answer.
In your opinion, was Saks' zero tolerance policy for employee theft reasonable? Was the policy likely cost-effective? Defend your answers.
Did Saks' anti-harassment policy and the related complaint procedure qualify as internal controls? Explain.
Identify five control activities that you would commonly find in a men's clothing department of a major department store. Identify the control objective associated with each of these activities.
Should a company's independent auditors be concerned with whether or not a client provides a non-hostile work environment for its employees? If your answer is "yes," identify the specific audit issues that would be relevant in this context.
Do you believe that Daniel Slater would have reacted differently if the auditor in question had been a female rather than a male? Explain.
Do you agree with Daniel Alanis that auditors are not entitled to make "honest mistakes"? Defend your answer.
Do you agree with the assertion that any and all associations that SEC registrants have with SSTs qualify as "material information" for financial reporting purposes and thus should be disclosed in their SEC filings? Are there other "sensitive" or questionable business activities that SEC

Showing 10200 - 10300 of 10291

First
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103

Contemporary Auditing 11th edition Michael C. Knapp - Solutions

Step by Step Answers