Why is Responsibility Accounting necessary and how is it implemented? 2) Determination of control risk in the HR cycle (personnel) include an example of the explanation you gave? 3) To design an audit program for testing controls, what stages must the auditor go through when auditing a banking service company?

Why is Responsibility Accounting necessary and how is it implemented? 2) Determination of control risk in the HR cycle (personnel) include an example of the explanation you gave? 3) To design an audit program for testing controls, what stages must the auditor go through when auditing a banking service company?

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter3: Internal Control Over Financial Reporting: Responsibilities Of Management And The External Auditor

Section: Chapter Questions

Problem 37RQSC

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Professional guidance indicates that the auditor should consider revenue recognition to be high risk in planning an audit of a company’s financial statements. a. Identify the activities that affect the revenue cycle. b. Identify the financial statement accounts typically associated with the revenue cycle.
Patrick Houghton was meeting with his manager to plan audit strategy in order to determine the amount of time to spend testing the client's internal controls and conducting detailed testing of transactions and account balances. Determining the audit strategy occurs during which phase of the audit? a. client acceptance stage b. planning stage c. performing stage d. reporting stage
The following are various activities an auditor doesduring audit planning.1. Determine the likely users of the financial statements.2. Identify whether any specialists are required for the engagement.3. Send an engagement letter to the client.4. Tour the client’s plant and offices.5. Compare key ratios for the company to those for industry competitors.6. Review management’s risk management controls and procedures.7. Review accounting principles unique to the client’s industry.8. Identify potential related parties that may require disclosure.For each procedure, indicate which of the first four parts of audit planning the procedureprimarily relates to: (1) accept client and perform initial audit planning; (2) understandthe client’s business and industry; (3) assess client business risk; (4) perform preliminaryanalytical procedures.
In making client acceptance and continuance decisions, the auditor will perform various procedures in assessing the client. Which of these would most likely not be one of those procedures? a. obtain background checks on management to assess management integrity b. review regulatory filings and examination reports c. analyze client financial statements and compare to industry metrics d. submit management to a lie detector test
How might an auditor effectively use preliminary analytical procedures in the audit of various expense accounts, such as miscellaneous expenses? How might this enable the auditor to better understand the business and its environment? How do computer-assisted procedures impact this audit?
Select the appropriate control activities for each of the following definitions. Definitions Control Activities a. The company should maintain security over assets and accounting records. Management should periodically determine whether the amounts of physical b. assets of the company match the accounting records. The company should provide employees with appropriate guidance to ensure C. they have the knowledge necessary to carry out their job duties. The actual performance of individuals or processes should be checked against d. their expected performance. Authorizing transactions, recording transactions, and maintaining control of the е. related assets should be separated among employees. To prevent improper use of the company's resources, only certain employees are allowed to carry out certain business activities.
When planning the audit of internal controls for an issuer, the audit team shoulda. Identify significant accounts, locations, and assertions.b. Conduct a walkthrough of the internal control process.c. Make inquiries of employees regarding the existence of control activities.d. Reperform control activities performed by client employees to determine theireffectiveness.
Compare and discuss the impact of the business environment on the internal audit risk assessment
CPAs may audit around or through computers in the audit of the financial statements of clients who use IT to process accounting data. c. In auditing through the computer, CPAs may use test data. (1) What are test data? (2) Why do CPAs use test data?
NOTE: PLEASE TAKE YOUR TIME AND ANALYSE THE QUESTION VERY WELL. PROVIDE DETAILED INFORMATION ANSWERS AND INFORMATION AS YOU SOLUTION. THANK YOU. You have been approached by the financial institutions Databank Financial Services Limited and Blackstar holdings limited to be their auditors. a. Iterate the factors that can heighten ‘engagement risk’ as auditors for either of this companies and what kind of information you will require to guide your decision. b. Assuming you consider a risk-based strategy as an effective audit strategy for executing your mandate, what are the probable areas of risk you will focus on and how will you test for them?
Which of the following is an attribute of the internal control procedure—assignment of responsibilities? A. The external auditors will monitor internal controls. B. The company should separate the custody of assets from accounting. C. Each position has clearly assigned responsibilities. D. To validate their accounting records, a company should have an audit by an external accountant.
1. CPAs may audit around or through computers in the examination of financial statements of client who utilize computer to process accounting data. Required: a. Describe the auditing approach referred to as auditing around the computer. b. Under what condition does the CPA decide to audit through the computer instead of around the computer?