Question: During the taking of physical inventory, the controller intention ally withheld several inventory tags from the employees responsible for the physical count. After the auditor

During the taking of physical inventory, the controller intention ally withheld several inventory tags from the employees responsible for the physical count. After the auditor left the client's premises at the completion of the inventory observation, the controller recorded nonexistent inventory on the tags and thereby significantly overstated earnings. How could the auditor have uncovered the misstatement, assuming that there are no perpetual records?

Step by Step Solution

★★★★★

3.36 Rating (162 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

The auditor could have uncovered the misstatement if there were adequate contr... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

185-B-A-A-A (251).docx

120 KBs Word File

Students Have Also Explored These Related Auditing Questions!

During the taking of its physical inventory on December 31, 2010, Euro Bath Company incorrectly counted its inventory as $496,000 instead of the correct amount of $480,000. Indicate the effect of the...

During the taking of its physical inventory on December 31, 2010, Best Interiors Company incorrectly counted its inventory as $145,000 instead of the correct amount of $175,000. Indicate the effect...

During the taking of its physical inventory on December 31, 2012, Kates Interiors Company incorrectly counted its inventory as $83,175 instead of the correct amount of $90,700. Indicate the effect of...

in Application of the Audit Process to the Other Cycles Explain why it is common for auditors to send confirmation requests to vendors with "zero balances" on the client's accounts payable listing...

Application of the Audit Process to the Other Cycles Answer the following questions: Explain why it is common for auditors to send confirmation requests to vendors with "zero balances" on the...

During the taking of physical inventory, the controller intentionally withheld several inventory tags from the employees responsible for the physical count. After the auditor left the client's...

During the taking of physical inventory, the controller intentionally withheld several inventory tags from the employees responsible for the physical count. After the auditor left the clients...

i need this by early morning. His mother later remarried--a fellow named MacAdam--and Johnny grew up in his stepfather's home with his mother, stepfather, sisters, brothers, and the stepfather's...

Ferrante Company sells 40,000 units at $44 per unit. Variablecosts are $32.12 per unit, and fixed costs are $228,100.Determine (a) the contribution margin ratio, (b) the unitcontribution margin, an 2...

Marquis Company acquired equipment. Marquis paid $160,000 in cash Immediately and signed a $640,000 noninterest-bearing note for the remaining balance, which is due in one year. An Interest rate of...

You own $5,000 par of the XYZ 8s of 09; they sell for 94% of par. The bond paid interest six months ago, and pays again tomorrow. How much is the next interest check? $376 $188 $200 $400

The following information comes from the accounts of Jersey Company. Required a. There were $170,000 in sales on account during the accounting period. Write-offs of uncollectible accounts were...

7 Zara, Sofia, Arun and Marcus run their own business. They share the money they earn from each project in the ratio of the number of hours they work on the project. This is the time-sheet for one of...

Dropping or Retaining a Segment LO 62 The Regal Cycle Company manufactures three types of bicyclesa dirt bike, a mountain bike, and a racing bike. Data on sales and expenses for the past quarter...

Many organizations use electronic funds transfer (EFT) when they are transferring cash among banks, collecting from customers, paying employees, and paying vendors. Under these systems, cash is...

Describe the difference between a general cash account and an imprest bank account.

For each of the following transaction cycles, provide an example of an error in cash that would affect the cycle: sales and accounts receivable, acquisition and payment, human resources and payroll....

Finer Diner claims that on any given night, the average number of tables served is 80. A food services researcher feels that this average is incorrect. The researcher selects a random sample of 64...

Consider the following cash flows of two mutually exclusive projects for AZ-Motorcars. Assume the discount rate for AZ-Motorcars is 9 percent. Year AZM Mini-SUV AZF Full-SUV 0 $ 485,000 $ 835,000 1...

Help please, also if you could could you write it on paper then take a picture pleaseeee . The National Highway Traffic Safety Administration (NHTSA) performed a series of brake tests to evaluate...