Fairness and Professionalism in the relationships between auditors and their clients.

In a 1988 article, Arthur Wyatt, a former member of the FASB, stated: Practicing professionals should place the public interest above the interests of clients, particularly when participating in a process designed to develop standards expected to achieve fair presentation. Granted that the increasingly detailed nature of FASB standards encourages efforts to find loopholes, a professional ought to strive to apply standards in a manner that will best achieve the objectives sought by the standards. Unfortunately, the auditor today is often a participant in aggressively seeking loopholes. The public, on the other hand, views auditors as their protection against aggressive standard applicatio... click for more

Auditing - Multiple Choice Questions

1. Which of the following pairs of accounts would an auditor most likely analyze on the same audit documentation? A) Notes receivable and interest income. B) Accrued interest receivable and accrued interest payable. C) Notes payable and notes receivable. D) Interest income and interest expense. 2. Reference in a principal auditor's report to the fact that part of the audit was performed by another auditor most likely would be an indication of A) divided responsibility between the auditors who conducted the audits of the components of the overall financial statements. B) lack of materiality of the portion of the financial statements audited by the other auditor. C)... click for more

Auditing - Internal control over cash transaction

John Harris, CPA, has been engaged to audit the financial statements of the Spartan Drug Store, Inc. Spartan is a medium-sized retail outlet that sells a wide variety of customer goods. All sales are for cash or check. Cashiers utilize cash registers to process theses transactions. There are no receipts by mail and there are no credit card or charge sales. Construct the “Processing Cash Collections” segment of the internal control questionnaire on “Cash Receipts” to be used in the evaluation of internal control over the Spartan Drug Store, Inc. Each question should elicit either a yes or a no response. Do not discuss the controls over cash sales.

Auditing

Given the increased emphasis on corporate fraud, should auditors be required to look aggressively for fraud factors like collusion, circumvention, and management override? Why or why not?

Auditing Multiple Choice

1. An auditor obtains knowledge about a new client’s business and its industry to a. Make constructive suggestions concerning improvements to the client’s internal control b. Develop an attitude of professional skepticism concerning management’s financial statements assertions c. Evaluate whether the aggregation of known misstatements causes the financial statements taken as a whole to be materially misstated d. Understand the events and transactions that may have an effect on the client’s financial statements. 2. Which of the following procedures would an auditor most likely include in the planning phase of a financial statement audit? a. Obtain an understanding of the entity’s risk... click for more