Questions and Answers of Integrated Audit Practice Case

The client and our firm have agreed on an initial estimated audit fee of $21,000 (see the engagement letter). However, the estimated total cost of performing this year's audit is $27,510 (see the fee
Oceanview Marine is currently a private company. How would the engagement letter (workpapers 4-1 and and 4-2) change if Oceanview were a publicly traded company? In what way would this affect your
The auditor reviews important financial statement numbers and ratios at both the beginning and the completion of the audit. Compare and contrast the purposes of(1) Preliminary analytical procedures
When you identified income statement fluctuations in steps (e) and (f) of this assignment, which information did you find most helpful—comparisons of the current year's and prior year's balances,
AU Section 316 indicates that the auditor should consider the results of analytical procedures performed in planning the audit that indicate possible implausible or unexpected relationships in
After obtaining an understanding of the client's internal controls, the auditor may choose to test some of the controls. If the results of those tests are satisfactory, the auditor may then rely on
On some audits, the auditor may choose not to rely on controls, and no tests of controls are performed. Indicate circumstances in which the auditor would choose not to test controls.
Indicate the effect on(a) The extent of tests of controls, and(b) The extent of substantive tests of balances if the auditor's preliminary assessment of control risk is below the maximum.
AICPA auditing standards address the confirmation of accounts receivable for private company audits. What are the circumstances under which confirmation of accounts receivable is not required?
When confirming accounting receivable, the auditor may use positive confirmations, negative confirmations, or a combination of both. Although the use of negative confirmations is less expensive than
Confirmations were emphasized in tests of accounts receivable, but are rarely used in tests of accounts payable. What factors account for this difference? When would confirmation of accounts payable
What is the primary objective in the audit of accounts payable? How might this affect the sampling method used and how the sample is evaluated?
The client received and recorded a large shipment of inventory on January 3rd that was shipped FOB shipping point on December29th. How should the auditor account for this in the search for unrecorded
Suppose there was a deposit-in-transit on the year-end bank reconciliation that was not received by the bank by the cutoff date. Discuss the possible cause(s) of this, and discuss the nature of the
Your preliminary judgment of materiality was based on net income. Why is it necessary to compare unadjusted misstatements to other bases of materiality? What should the auditor do if the unadjusted
The client received a large shipment of inventory on December 31st during the inventory observation. What procedures should the auditor perform to verify that the acquisition of inventoryis properly