Questions from Auditing and Assurance

Q: Dunder-Mifflin Inc. wanted to expand its manufacturing and sales

Dunder-Mifflin Inc. wanted to expand its manufacturing and sales facilities. The company applied for a loan from First Bank, presenting the prior-year audited financial statements and the forecast for...

Q: Audit risks for particular accounts and disclosures can be conceptualized in the

Audit risks for particular accounts and disclosures can be conceptualized in the model: Audit risk (AR) = Inherent risk (IR) × Control risk (CR) × Detection risk (DR). Use this model as a framework fo...

Q: Suppose management estimated the market valuation of some obsolete inventory at $

Suppose management estimated the market valuation of some obsolete inventory at $99,000; this inventory was recorded at $120,000, which resulted in recognizing a loss of $21,000. The auditors obtained...

Q: This question consists of a number of items pertaining to an auditor’s

This question consists of a number of items pertaining to an auditor’s risk analysis for a company. Your task is to tell how each item affects overall audit risk—that is, the probability of issuing an...

Q: What is management’s responsibility for reporting on internal control over financial reporting

What is management’s responsibility for reporting on internal control over financial reporting?

Q: Management fraud (fraudulent financial reporting) is not the expected norm

Management fraud (fraudulent financial reporting) is not the expected norm, but it happens from time to time. In the United States, several cases have been widely publicized. They happen when motives...

Q: The following situations represent errors and frauds that could occur in financial

The following situations represent errors and frauds that could occur in financial statements. Required: State how the ratio in question would compare (higher, equal, or lower) to what the ratio shou...

Q: The auditor should establish an overall audit strategy that sets the scope

The auditor should establish an overall audit strategy that sets the scope, timing, and direction of the audit and guides the development of the audit plan. In establishing the overall audit strategy,...

Q: What are management’s and auditors’ respective responsibilities regarding internal control?

What are management’s and auditors’ respective responsibilities regarding internal control?

Q: Give an example of an error or fraud that would misstate financial

Give an example of an error or fraud that would misstate financial statements to affect the accounts as follows, taking each case independently. (Note: “Overstate” means the account has a higher value...