Questions from Auditing and Assurance

Q: At December 31, 2018, Earth Wear has $5,

At December 31, 2018, Earth Wear has $5,890,000 in a liability account labeled “Reserve for returns.” The footnotes to the financial statements contain the followin...

Q: Arthur, CPA, is auditing The Home Improvement Store as of

Arthur, CPA, is auditing The Home Improvement Store as of December 31, 2018. As with all audit engagements, Arthur’s initial procedures are to analyze the entity’s...

Q: An auditor is required to obtain sufficient understanding of each component of

An auditor is required to obtain sufficient understanding of each component of an entity’s internal control system to plan the audit of the entity’s financial statements and to assess control risk for...

Q: The existence of audit risk is recognized by the statement in the

The existence of audit risk is recognized by the statement in the auditor’s standard report that the auditor a. Obtains reasonable assurance about whether the financial statements are free of material...

Q: Johnson, CPA, has been engaged to audit the financial statements

Johnson, CPA, has been engaged to audit the financial statements of Rose, Inc., a publicly held retailing company. Before assessing control risk, Johnson is required to obtain an understanding of Rose...

Q: Assume that you are an audit senior in charge of planning the

Assume that you are an audit senior in charge of planning the audit of an entity that your firm has audited for the previous four years. During the audit planning meeting with the manager and partner...

Q: Auditors use various tools to document their understanding of an entity’s internal

Auditors use various tools to document their understanding of an entity’s internal control system, including narrative descriptions, internal control questionnaires, and flowcharts. Required: a. Iden...

Q: The Audit Committee of a small manufacturing company that sells its products

The Audit Committee of a small manufacturing company that sells its products globally has directed internal audit to perform specific annual reviews to monitor manual journal entries, with a particula...

Q: Cook, CPA, has been engaged to audit the financial statements

Cook, CPA, has been engaged to audit the financial statements of General Department Stores, Inc., a continuing audit entity, which is a chain of medium-sized retail stores. General’s fiscal year will...

Q: Ken Smith, the partner in charge of the audit of Houghton

Ken Smith, the partner in charge of the audit of Houghton Enterprises, identified the following significant deficiencies during the audit of the December 31, 2018, financial statements: 1. Controls fo...