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ACC 403 Assignment 1 Auditors and Regulatory Oversight

ACC 403 Assignment 1 Auditors and Regulatory Oversight

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ACC 403 Assignment 1 Auditors and Regulatory Oversight

The Securities and Exchange Commission (SEC) regulates public companies. The SEC has found that some of these companies have violated GAAP by using creative accounting practices to mislead investors and creditors regarding the health of their company.

Use the Internet or Strayer Library to research a recent accounting scandal within the last five (5) years where the SEC accused public companies of accounting irregularities.

Write a three to four (3-4) page paper in which you:

Analyze the audit report that the CPA firm issued. Ascertain the legal liability to third parties who relied on financial statements under both common and federal securities laws. Justify your response.

Speculate on which statement of generally acceptable auditing standards (GAAS) that the company violated in performing the audit.

ACC 403 Assignment 2 Audit Planning and Control NEW

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ACC 403 Assignment 2 Audit Planning and Control NEW

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ACC 403 Assignment 2 Audit Planning and Control NEW

It is common industry knowledge that an audit plan provides the specific guidelines auditors must follow when conducting an external audit. External public accounting firms conduct external audits to ensure outside stakeholders that the company’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) standards.

Use the Internet to select a public accounting company that appeals to you. Imagine that you are a senior partner in a public accounting firm hired to complete an audit for the chosen public company.

Write a four to six (4-6) page paper in which you:

Outline the critical steps inherent in planning an audit and designing an effective audit program. Based upon the type of company selected, provide specific details of the actions that the company should undertake during planning and designing the audit program.
Examine at least two (2) performance ratios that you would use in order to determine which analytical tests to perform. Identify the accounts that you would test, and select at least three (3) analytical procedures that you would use in your audit.

Strayer ACC 403 Week 11 Final Exam Part 1 NEW

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Strayer ACC 403 Week 11 Final Exam Part 1 NEW

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1. An auditor who audits a business cycle that has low inherent risk should:

2. The preliminary judgment about materiality and the amount of audit evidence accumulated are ________ related.

3. Auditors are responsible for determining whether financial statements are materially misstated, so upon discovering a material misstatement they must bring it to the attention of:

4. As the acceptable level of detection risk increases, an auditor may change the:

5. The scope paragraph of the standard unqualified auditor’s report states that “… the standards require that we plan and perform the audit to obtain ________ assurance about whether the financial statements are free of material misstatement.” What type of assurance is given?

6. A five-step approach can be used to identify deficiencies, significant deficiencies, and material weaknesses. The first step in this approach is:

7. When considering internal controls, an important point to consider is that:

8. In performing the audit of internal control over financial reporting the auditor emphasizes internal control over class of transactions because:

9. Which of the following is responsible for establishing a private company’s internal control?

10. Internal controls:

11. Misappropriation of assets is normally perpetrated by:

12. Fraud is more prevalent in smaller businesses and not-for-profit organizations because it is more difficult for them to maintain:

13. Two of the most useful warning signals that can indicate that revenue fraud is occurring are:

14. When analyzing accounts for fraud risk:

15. Who is most likely to perpetrate fraudulent financial reporting?

16. Controls that are designed for each software application and are intended to help a company satisfy the transaction-related audit objectives are:

17. Which of the following is a component of general controls?

18. A control that relates to all parts of the IT system is called a(n):

19. The approach to auditing where the auditor does not test automated controls to reduce assessed control risk is called:

20. Which of the following computer-assisted auditing techniques inserts an audit module in the client’s application system to identify specific types of transactions?

21. Collectively, procedures performed to obtain an understanding of the entity and its environment, including internal controls, represent the auditor’s:

22. An increased extent of tests of controls is most likely to occur when:

23. When the auditor has completed the tests of details of balances and enters phase 4 of the audit process, she must still perform audit procedures for which of the following?

24. Analytical procedures must be performed in:

25. An exception or deficiency found in a test of controls:

Strayer ACC 403 Week 9 Quiz 7 Chapter 14 & 15 NEW

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Strayer ACC 403 Week 9 Quiz 7 Chapter 14 & 15 NEW

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1. Which of the following is an account that is not affected by the sales and collection cycle?

2. When designing audit procedures, tracing of source documents to the customers subsidiary ledger and subsequently to the general ledger is done to satisfy what assertion?

3. The ________ is a contract between a carrier (e.g., a trucking company) and the seller of goods that dictates the details surrounding the shipment of goods.

4. A ________ is a document that indicates a request for merchandise by a customer.

5. Generally, when is the earliest point in the sales and collection cycle in which revenue can be recognized?

6. A document prepared to initiate shipment of the goods sold by an independent shipper is the:

7. The audit procedure referred to as proof of cash receipts is particularly useful to test:

8. What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected?

9. A document sent to each customer showing his or her beginning accounts receivable balance and the amount and date of each sale, cash payment received, any debit or credit memo issued, and the ending balance is the:

10. An effective procedure to test for unbilled shipments is to trace from the:

11. When assessing risk control, the auditor must do all of the following except:

12. Credit memos are normally issued to:

13. The document used to indicate to the customer the amount of a sale and payment due date is the:

14. What event initiates a transaction in the sales and collection cycle?

15. Some companies have customers send payments directly to an address maintained by a bank. This is called a(n) ________ system.

16. To determine if a sample is truly representative of the population, an auditor would be required to:

17. When auditors wish to evaluate a sample statistically, an acceptable selection method is:

18. Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?

19. Simple random sampling:

20. Which of the following is the exception rate that the auditor expects to find before testing?

21. One of the causes of nonsampling risk is:

22. When the auditor goes through a population and selects items using nonprobabilistic selection methods, without regard to their size, source, or other distinguishing characteristics, it is called:

23. The risk which the auditor is willing to take in accepting a control as being effective when the true population exception rate is greater than a tolerable rate is the:

24. A sample in which the characteristics of the sample are the same as those of the population is a(n):

25. The acceptable risk of overreliance:

26. When the auditor decides to select less than 100 percent of the population for testing, the auditor is said to use:

27. Auditors often use the ________ to determine the estimated population exception rate.

28. Rodgers CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6%. In auditing client invoices Rodgers should use:

29. When using statistical sampling, the auditor would most likely require a smaller sample if the:

30. The most serious shortcoming of the haphazard sample selection method is:

Strayer ACC 403 Week 9 Quiz 7 NEW

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Strayer ACC 403 Week 9 Quiz 7 NEW

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1. A document that initiates shipment of goods and indicates the description of the merchandise, the quantity shipped, and customer name and address is the:

2. When an employee who is authorized to make customer entries in the accounts receivable subsidiary ledger, purposefully enters cash received into the wrong customer’s account that employee may be suspected of:

3. Before goods are shipped on account, a properly authorized person must:

4. In the accounts receivable subsidiary ledger the length of time the account has been due can be useful to the client and the auditor in preparing the:

5. The document that requires adjustments to the customers subsidiary ledger account is the:

6. The total of the individual account balances in the accounts receivable subsidiary ledger should equal the:

7. An effective procedure to test for unbilled shipments is to trace from the:

8. When assessing risk control, the auditor must do all of the following except:

9. ________ tests are for omitted transactions, while ________ tests are for nonexistent transactions.

10. A document sent to each customer showing his or her beginning accounts receivable balance and the amount and date of each sale, cash payment received, any debit or credit memo issued, and the ending balance is the:

11. Credit memos are normally issued to:

12. Generally, when is the earliest point in the sales and collection cycle in which revenue can be recognized?

13. Most companies recognize sales revenue when:

14. What critical event must take place before goods can be shipped in order to assure payment can be reasonably expected?

15. When designing audit procedures, tracing of source documents to the customers subsidiary ledger and subsequently to the general ledger is done to satisfy what assertion?

16. Which of the following is the exception rate that the auditor expects to find before testing?

17. Which of the following is the risk that an auditor will reach an incorrect conclusion because a sample is not representative of the population?

18. A sample in which the characteristics of the sample are the same as those of the population is a(n):

19. Rodgers CPA believes that the rate of client billing errors is 4% and has established a tolerable deviation rate of 6%. In auditing client invoices Rodgers should use:

20. When auditors wish to evaluate a sample statistically, an acceptable selection method is:

21. Auditors often use the ________ to determine the estimated population exception rate.

22. The most serious shortcoming of the haphazard sample selection method is:

23. The advantage of systematic sample selection is that:

24. Attributes sampling would be an appropriate method to use on which one of the following procedures in an audit program?

25. When the computed upper exception rate is greater than the tolerable exception rate, it is necessary for the auditor to take specific action. Which of the following courses of action would be most difficult to justify?

26. One of the causes of nonsampling risk is:

27. The sample exception rate equals:

28. In systematic sample selection, the population size is divided by the number of sample items desired in order to determine the:

29. Which of the following would have the least impact in determining sample size?

30. When using statistical sampling, the auditor would most likely require a smaller sample if the:

Strayer ACC 403 Week 10 Quiz 8 – Part 2 Chapter 17 NEW

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Strayer ACC 403 Week 10 Quiz 8 – Part 2 Chapter 17 NEW

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1. The client’s trial balance has a balance of $410,000 for merchandise inventory. As the auditor you are willing to accept a balance that is within $20,000 of either side of the recorded balance. You compute a 95% confidence interval of $395,000 to $425,000. You could therefore:

2. If the population is not considered acceptable, one step the auditor is likely to take is to:

3. The auditors principal objective when using a sample of tests of details of balances is whether the:

4. When selecting a sample size for substantive tests of balances which factor, other factors being equal, would result in a larger sample?

5. The final step in the evaluation of the audit results is the decision to:

6. Monetary unit sampling is not particularly effective at detecting:

7. In monetary unit sampling, the relationship between tolerable misstatement size and required sample size is:

8. If no exceptions were found in the substantive tests of transactions:

9. When the sample selection is done using probability proportional to size sample selection (PPS):

10. When using monetary unit sampling, the recorded dollar population is a definition of all the items in the:

11. When defining the population and the sampling unit for tests of details of balances:

12. If an auditor concludes that internal controls are likely to be effective, the preliminary assessment of control risk can be reduced, leading to which of the following impacts on the acceptable risk of incorrect acceptance?

13. If acceptable audit risk is increased, acceptable risk of incorrect acceptance should be:

14. The word below that best explains the relationship between required sample size and the acceptable risk of incorrect acceptance is:

15. The risk the auditor is willing to take of accepting a balance as correct when the true misstatement in the balance under audit is greater than the tolerable misstatement is:

Strayer ACC 403 Week 7 Quiz NEW

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Strayer ACC 403 Week 7 Quiz NEW

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1. The auditors primary purpose in auditing the client’s system of internal control over financial reporting is:

2. Which of the following components of the control environment define the existing lines of responsibility and authority?

3. Which of the following is not one of the three primary objectives of effective internal control?

4. Internal controls can never be regarded as completely effective. Even if company personnel could design an ideal system, its effectiveness depends on the:

5. Reasonable assurance allows for:

6. In performing the audit of internal control over financial reporting the auditor emphasizes internal control over class of transactions because:

7. When one material weakness is present at the end of the year, management of a public company must conclude that internal control over financial reporting is:

8. A five-step approach can be used to identify deficiencies, significant deficiencies, and material weaknesses. The first step in this approach is:

9. Proper segregation of functional responsibilities calls for separation of:

10. When considering internal controls, an important point to consider is that:

11. Sarbanes-Oxley requires management to issue an internal control report that includes two specific items. Which of the following is one of these two requirements?

12. To issue a report on internal control over financial reporting for a public company, an auditor must:

13. The employee in charge of authorizing credit to the company’s customers does not fully understand the concept of credit risk. This lack of knowledge would constitute:

14. An act of two or more employees to steal assets and cover their theft by misstating the accounting records would be referred to as:

15. Which of the following deal with ongoing or periodic assessment of the quality of internal control by management?

16. When assessing the risk for fraud, the auditor must be cognizant of the fact that:

17. Companies may intentionally understate earnings when income is high to create ________ that may be used in future years to increase earnings.

18. A company is concerned with the theft of cash after the sale has been recorded. One way in which fraudsters conceal the theft is by a process called “lapping.” Which of the following best describes lapping?

19. Fraud awareness training should be:

20. Fraud is more prevalent in smaller businesses and not-for-profit organizations because it is more difficult for them to maintain:

21. Which of the following questions is the auditor not required to ask company management when assessing fraud risk?

22. Financial statement manipulation risk is arguably present for all companies’ financial statements. However, the risk is elevated for companies that:

23. When dealing with revenue frauds:

24. Which of the following is a factor that relates to incentives to misappropriate assets?

25. Which of the following parties is responsible for implementing internal controls to minimize the likelihood of fraud?

26. In the fraud triangle, fraudulent financial reporting and misappropriation of assets:

27. Misappropriation of assets is normally perpetrated by:

28. Two of the most useful warning signals that can indicate that revenue fraud is occurring are:

29. Which of the following is a factor that relates to incentives or pressures to commit fraudulent financial reporting?

30. Which party has the primary responsibility to oversee an organization’s financial reporting and internal control process?

Strayer ACC 403 Week 11 Final Exam Part 2 NEW

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Strayer ACC 403 Week 11 Final Exam Part 2 NEW

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1. The audit procedure referred to as proof of cash receipts is particularly useful to test:

2. Which of the following is an account that is not affected by the sales and collection cycle?

3. The ________ is a contract between a carrier (e.g., a trucking company) and the seller of goods that dictates the details surrounding the shipment of goods.

4. Who is generally responsible for opening receipts when a company uses a lockbox to speed the handling of cash receipts?

5. What event initiates a transaction in the sales and collection cycle?

6. Auditors often use the ________ to determine the estimated population exception rate.

7. Which of the following occurrences would be least likely to warrant further audit attention for the auditor?

8. The most serious shortcoming of the haphazard sample selection method is:

9. A sample in which every possible combination of items in the population has an equal chance of constituting the sample is a:

10. One of the causes of nonsampling risk is:

11. Communication addressed to the debtor requesting him or her to confirm whether the balance as stated on the communication is correct or incorrect is a:

12. For most audits, a proper cash receipts cutoff is less important than the sales cutoff because the improper cutoff of cash:

13. The audit procedure that provides the auditor with the most appropriate evidence when performing test of details of balances for accounts receivable is:

14. Confirmation of accounts receivable selected from the trial balance is the most common test of details of balances for the ________ of accounts receivable.

15. Which of the following is likely to be determined first when performing tests of details for accounts receivable?

16. In estimating the population misstatement, the first step in projecting from the sample to the population is to:

17. You are auditing Nelson and Company and determined that the sample results support a conclusion that the account is materially misstated, when in fact it was not misstated. This illustrates the risk of:

18. If an auditor concludes that internal controls are likely to be effective, the preliminary assessment of control risk can be reduced, leading to which of the following impacts on the acceptable risk of incorrect acceptance?

19. The client’s trial balance has a balance of $410,000 for merchandise inventory. As the auditor you are willing to accept a balance that is within $20,000 of either side of the recorded balance. You compute a 95% confidence interval of $395,000 to $425,000. You could therefore:

20. The allowance for sampling risk when no misstatements are found in the sample is:

21. Inventory is a complex area to audit for all but which of the following reasons?

22. ________ is normally characterized as a difficult and complex account to audit.

23. If an auditor were concerned with obtaining evidence about the appropriateness of the value of inventory, which of the following tests would be most appropriate?

24. When labor is a significant part of inventory, verifying the proper accounting of these costs should be tested in the:

25. Comparing the physical counts with the perpetual inventory master files satisfies the balance-related audit objective of:

26. When should auditors generally assess a client’s ability to continue as a going concern?

27. The letter of representation obtained from an audit client should be:

28. After the balance sheet date, but prior to the issuance of the audit report, the client suffers an uninsured loss of their inventory as a result of a fire. The amount of the loss is material. The auditor should:

29. Refusal by a client to prepare and sign the representation letter would require the auditor to issue a:

30. When using the probability threshold for contingencies, the likelihood of the occurrence of the event is classified as

Strayer ACC 403 Week 6 Quiz 4 NEW

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Strayer ACC 403 Week 6 Quiz 4 NEW

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1. If planned detection risk is reduced, the amount of evidence the auditor accumulates will:

2. Auditors are responsible for determining whether financial statements are materially misstated, so upon discovering a material misstatement they must bring it to the attention of:

3. The preliminary judgment about materiality and the amount of audit evidence accumulated are ________ related.

4. An auditor who audits a business cycle that has low inherent risk should:

5. Inherent risk and control risk:

6. Auditors generally allocate the preliminary judgment about materiality to the:

7. To what extent do auditors typically rely on internal controls of their public company clients?

8. When the auditor is attempting to determine the extent to which external users rely on a client’s financial statements, they may consider several factors except for:

9. When taken together, the concepts of risk and materiality in auditing:

10. When auditors allocate the preliminary judgment about materiality to account balances, the materiality allocated to any given account balance is referred to as:

11. Auditors frequently refer to the terms audit assurance, overall assurance, and level of assurance to refer to ________.

12. The scope paragraph of the standard unqualified auditor’s report states that “… the standards require that we plan and perform the audit to obtain ________ assurance about whether the financial statements are free of material misstatement.” What type of assurance is given?

13. If an auditor believes the chance of financial failure is high and there is a corresponding increase in business risk for the auditor, acceptable audit risk would likely:

14. Auditing standards ________ that the basis used to determine the preliminary judgment about materiality be documented in the audit files.

15. Auditors typically rely on internal controls of their private company clients:

Strayer ACC 403 Week 6 Quiz Chapter 9 NEW

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Strayer ACC 403 Week 6 Quiz Chapter 9 NEW

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1. The scope paragraph of the standard unqualified auditor’s report states that “… the standards require that we plan and perform the audit to obtain ________ assurance about whether the financial statements are free of material misstatement.” What type of assurance is given?

2. When auditors allocate the preliminary judgment about materiality to account balances, the materiality allocated to any given account balance is referred to as:

3. To what extent do auditors typically rely on internal controls of their public company clients?

4. As the risk of material misstatement increases, detection risk should:

5. As the acceptable level of detection risk increases, an auditor may change the:

6. Inherent risk is ________ related to detection risk and ________ related to the amount of audit evidence.

7. Inherent risk is often high for an account such as:

8. When dealing with audit risk:

9. Auditors are ________ to document the known and likely misstatements in the financial statements under audit.

10. Amounts involving fraud are usually considered ________ important than unintentional errors of equal dollar amounts.

11. When the auditor is attempting to determine the extent to which external users rely on a client’s financial statements, they may consider several factors except for:

12. Auditors are responsible for determining whether financial statements are materially misstated, so upon discovering a material misstatement they must bring it to the attention of:

13. If an auditor believes the chance of financial failure is high and there is a corresponding increase in business risk for the auditor, acceptable audit risk would likely:

14. Inherent risk and control risk:

15. If it is probable that the judgment of a reasonable person will be changed or influenced by the omission or misstatement of information, then that information is, by definition of FASB Statement No. 2: