Peacock Company: Incomplete Flowchart of Inventory and Purchasing Control Procedures.

Peacock Company is a wholesaler of soft goods. The inventory is composed of approximately 3,500 different items. The company employs a computerized batch processing system to maintain its perpetual inventory records. The system is run each weekend so the inventory reports are available on Monday morning for management use. The system has been functioning satisfactorily for the past 15 months, providing the company with accurate records and timely reports. The preparation of purchase orders is automatic as a part of the inventory system to ensure that the company will maintain enough inventory to meet customer demand. When an item of inventory falls below a predetermined level, a record of ... click for more

Auditing Questions

1. The natural sign of an asset is a: a. Debit b. Credit c. Both d. None 2. Internal Auditors are referred to as independent auditors. a. True b. False c. Neither 3. The three categories for standards for auditors as set forth by GAAS are general standards, standards of fieldwork, and standards of examination. a. True b. False c. Maybe so 4. Auditing is a systematic process of obtaining and evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users. a. True b. False c. No way 5 Audit Risk can be composed of the... click for more

Audit of Long-Term Debt

Audit of Long-Term Debt The long-term debt working paper (indexed K-1) on attached doc. was prepared by client personnel and audited by AA, an audit assistant, during the calendar year 2006 audit of American Widgets, Inc., a continuing audit client. The engagement supervisor is thoroughly reviewing the working papers. Overall Conclusions Long-term debt, accrued interest payable, and interest expense are correct and complete at 12/31/06. Required Identify the deficiencies in the working paper that the engagement supervisor should discover.

Related Entity Transactions

It is common for an entity to have transactions with related entities—some of which are fully owned, some of which share common ownership, but are not otherwise related, and others where ownership is small but there is control. Tyco is a conglomerate organization that had $36 billion in revenue. In a court trial, it was alleged that the CEO of the organization used corporate funds: • For a private birthday party (over $1 million) • To lavishly furnish an apartment in New York City • To pay domestic help for taking care of the apartment • To make loans to key executives that were subsequently forgiven by the CEO (1) What audit procedures would have identified these transactions? (2... click for more

Public Accounting Profession

Like most young professionals, earning a reasonable livelihood ranked as a top priority for Scott Fane, a CPA specializing in taxation services who relocated to Florida in the mid-1980s. To practice as a CPA in Florida, Scott Fane registered with the Florida Board of Accountancy, which regulates the public accounting profession within the state of Florida. Scott Fane soon butted heads with that state agency. A protracted legal battle ensued. In 1993, the young CPA and the Florida Board of Accountancy finally settled their differences in the hallowed chambers of the U.S. Supreme Court. QUESTIONS: 1. In a professional services context, “lowballing” refers to the practice of underpricin... click for more