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For each internal control, identify a specific misstatement that is likely to be prevented if the control exists and is effective.
A vendor invoice was paid even though no merchandise was ever received. The accounts payable software application does not require the input of a valid .
Reconcile the accounts receivable master file with the control account and review accounts outstanding more than 90 days.
Describe what additional procedures Pherson must perform if auditing the financial statements of a public company.
How would you improve internal controls for each of the three companies?
The auditor identified a material misstatement in the financial statements that was not detected by management of the company.
For each cash receipts transaction-related audit objective, identify one or more existing controls.
e. What information is provided to help readers understand why management arrived at that conclusion?
Define misappropriation of assets and give two examples of misappropriation of assets.
Give examples of risk factors for misappropriation of assets for each of the three fraud conditions: incentives/pressures, opportunities, and attitudes.
Auditors are required to make inquiries of individuals in the company when gathering information to assess fraud risk.
The two components of professional skepticism are a questioning mind and a critical assessment of the audit evidence.
Discuss the importance of the control environment, or "setting the tone at the top," in establishing a culture of honesty and integrity in a company.
What three auditor actions are required to address the potential for management override of controls?
Name the three categories of inquiry and describe the purpose of each when used by an auditor to obtain additional information about a suspected fraud.
Identify three verbal and three nonverbal cues that may be observed when making inquiries of an individual who is being deceitful.
New accounting pronouncements have resulted in explanatory paragraphs for consistency for the company and other firms in the industry.
Who should attend the brainstorming session and when should the session be held?
Cash paid on accounts receivable that had been prelisted by a secretary was stolen by the bookkeeper who records cash receipts and accounts receivable.
What are the benefits of a prelisting of cash? Who should prepare the prelisting and what duties should that person not perform?
List the most important deficiency in internal control and state the misstatements that are likely to result from the deficiency.
What is the auditor's responsibility for discovering this type of embezzlement?
The company did not record credit memos for returns received in the last month of the year. The goods received were counted as part of the company.
Describe the type of fraud risk that is likely associated with the need for this audit procedure.
The client engages in several material transactions with entities owned by family members of several of the client's senior executives.