Auditing (Inventories and Cost of Goods Sold)

12-22) At the beginning of your audit of Crestview Manufacturing Company’s financial statements for the year ended December 31, 200X, the company president confides in you that Henry Ward, an employee, is living on a scale in excess of that which his salary would support. The employee has been a buyer in the purchasing department for six years and has charge of purchasing all general materials and supplies. He is authorized to sign purchase orders for amounts up to $500. Purchase orders in excess of $500 require the countersignature of the general purchasing agents. The president understands that the usual audit of financial statements is not designed, and cannot be relied upon, to provid... click for more

Auditing problems : Auditing Operations and Completing the Audit

16-38) In connection with an audit of the financial statements of Olympia Company, the auditors are reviewing procedures for accumulating direct labor-hours. They learn that all production is by job order and that all employees are paid hourly wages, with time and a half for overtime hours. Olympia’s direct labor-hour input process for payroll and job-cost determination is summarized in the flowchart that is illustrated below. Steps A and C are performed in timekeeping, step B in the factory operating departments, step D in payroll audit and control, step E in data input, and step F in computer operation. Required: For each input processing step A through F: a. List the possible error... click for more

Audits

Explain how a licensed CPA (as an outside auditor) could be of value to your company. Critique current auditing standards. Analyze the importance of ethics in the audit process. Assess the role of auditing in reducing information risk for decision makers Explain how independent audits could help the decision makers at your company.

Auditing

Do poor internal controls mean that the financial statements are misstated? Why or why not? If not, why even consider internal controls?

Audit Risk

Your firm has been hired as an outside auditor to conduct an audit on a growing software company that is getting ready to go public. The company has been in business for approximately five years, and the Controller position has had three different people in this time period. The main shareholder tells you the first Controller left because he had a problem “keeping his fingers out of the cookie jar.” The shareholder doesn’t want to elaborate further, saying “it is water under the bridge.” The previous audit firm recommended that the shareholder establish policies and procedures to ensure separation of duties. However, the shareholder never had the time to do this. Subsequent Controllers have ... click for more