All Related Questions of Internal Audit

Q: Wade Corp. has 150,000 shares of common stock outstanding

Wade Corp. has 150,000 shares of common stock outstanding. In 2014, the company reports income from continuing operations before income tax of $1,210,000. Additional transactions not considered in t...

Q: Thinken Technology recently merged with College Electronix (CE), a computer

Thinken Technology recently merged with College Electronix (CE), a computer graphics manufacturing firm. In performing a comprehensive audit of CE’s accounting system, Gerald Ott, internal audit manag...

Q: Indicate which of the following activities performed by an auditor for a

Indicate which of the following activities performed by an auditor for a governmental client are (a) allowable, (b) permitted if safeguards are in place, or (c) prohibited. 1. Serving as an adviser on...

Q: The following situations involve the provision of nonaudit services. Indicate whether

The following situations involve the provision of nonaudit services. Indicate whether providing the service is a violation of AICPA rules or SEC rules including Sarbanes-Oxley requirements on independ...

Q: Each of the following situations involves possible violations of the AICPA's Code

Each of the following situations involves possible violations of the AICPA's Code of Professional Conduct. For each situation, state whether it is a violation of the Code. In those cases in which it i...

Q: In the normal course of performing their responsibilities, auditors often conduct

In the normal course of performing their responsibilities, auditors often conduct audits or reviews of the following: 1. Federal income tax returns of an officer of the corporation to determine whethe...

Q: The Institute of Internal Auditors (IIA) is an international professional

The Institute of Internal Auditors (IIA) is an international professional association of more than 170,000 members with global headquarters in Altamonte Springs, Florida. Throughout the world, The IIA...

Q: Superior Co. manufactures automobile parts for sale to the major U

Superior Co. manufactures automobile parts for sale to the major U.S. automakers. Superior's internal audit staff is to review the internal controls over machinery and equipment and make recommendatio...

Q: Lajod Company has an internal audit department consisting of a manager and

Lajod Company has an internal audit department consisting of a manager and three staff auditors. The manager of internal audits, in turn, reports to the corporate controller. Copies of audit reports a...

Q: Weston Corporation has an internal audit department operating out of the corporate

Weston Corporation has an internal audit department operating out of the corporate headquarters. Various types of audit assignments are performed by the department for the eight divisions of the compa...

Q: Haskin Company was founded 40 years ago and now has several manufacturing

Haskin Company was founded 40 years ago and now has several manufacturing plants in the Northeast and Midwest. The evaluation of proposed capital expenditures became increasingly difficult for managem...

Q: Lecimore Company has a centralized purchasing department that is managed by Joan

Lecimore Company has a centralized purchasing department that is managed by Joan Jones. Jones has established policies and procedures to guide the clerical staff and purchasing agents in the day-to-da...

Q: You were in the final stages of your audit of the financial

You were in the final stages of your audit of the financial statements of Ozine Corporation for the year ended December 31, 2011, when you were consulted by the corporation’s president, who believes t...

Q: During audit planning, an auditor obtained the following information:

During audit planning, an auditor obtained the following information: 1. Management has a strong interest in employing inappropriate means to minimize reported earnings for tax-motivated reasons. 2. T...

Q: Kent, CPA, is the engagement partner on the financial statement

Kent, CPA, is the engagement partner on the financial statement audit of Super Computer Services Co. (SCS) for the year ended April 30, 2011. On May 6, 2011, Smith, the senior auditor assigned to the...

Q: In Part I of the case, you performed preliminary analytical procedures

In Part I of the case, you performed preliminary analytical procedures for Pinnacle. The purpose of Part II is to identify factors influencing risks and the relationship of risks to audit evidence. Du...

Q: Faldo Corp. is a public company and has 100,000

Faldo Corp. is a public company and has 100,000 common shares outstanding. In 2014, the company reported income from continuing operations before income tax of $2,710,000. Additional transactions not...

Q: Capwell Corporation uses a periodic inventory system. The company’s ending inventory

Capwell Corporation uses a periodic inventory system. The company’s ending inventory on December 31, 2018, its fiscal-year end, based on a physical count, was determined to be $326,000. Capwell’s unad...

Q: The Cummings Company charged various expenditures made during 2018 to an account

The Cummings Company charged various expenditures made during 2018 to an account called repairs and maintenance expense. You have been asked by your supervisor in the company’s internal audit departme...

Q: Tralor Corporation manufactures and sells several different lines of small electric components

Tralor Corporation manufactures and sells several different lines of small electric components. Its internal audit department completed an audit of its expenditure processes. Part of the audit involve...

Q: The following description represents the policies and procedures for agent expense reimbursements

The following description represents the policies and procedures for agent expense reimbursements at Excel Insurance Company. Agents submit a completed expense reimbursement form to their branch manag...

Q: The management at Covington, Inc., recognizes that a well-

The management at Covington, Inc., recognizes that a well-designed internal control system provides many benefits. Among the benefits are reliable financial records that facilitate decision making and...

Q: Rodgers Industries Inc. completed its fiscal year on December 31.

Rodgers Industries Inc. completed its fiscal year on December 31. Near the end of the fiscal year, the company’s Internal Audit Department determined that an important internal control procedure had n...

Q: Which of the following procedures would provide the most reliable audit evidence

Which of the following procedures would provide the most reliable audit evidence? a. Inquiries of the client’s internal audit staff. b. Inspection of prenumbered client purchase orders filed in the vo...

Q: North, CPA, is planning an independent audit of the financial

North, CPA, is planning an independent audit of the financial statements of General Company. In determining the nature, timing, and extent of the audit procedures, North is considering General’s inter...

Q: Following is a list of various professional services. Identify each by

Following is a list of various professional services. Identify each by its apparent characteristics as audit engagement, attestation engagement, or assurance engagement. Because audits are a subset of...

Q: The organization primarily responsible for ensuring that public officials are using public

The organization primarily responsible for ensuring that public officials are using public funds efficiently, economically, and effectively is the a. Governmental Internal Audit Agency (GIAA). b. Cent...

Q: You are the director of internal auditing of a large municipal hospital

You are the director of internal auditing of a large municipal hospital. You receive monthly financial reports prepared by the accounting department, and your review of them has shown that total accou...

Q: The study and evaluation of management risk mitigation control is not easy

The study and evaluation of management risk mitigation control is not easy. First, auditors must determine the risks and the controls subject to audit. Then they must find a standard by which performa...

Q: Follow the instructions preceding the case in problem 10.60.

Follow the instructions preceding the case in problem 10.60. Write the audit approach section like the cases in the chapter. Rogue Trader In February 1989, 22-year-old Nicholas Leeson joined Barings...

Q: You are in the final stages of your audit of the financial

You are in the final stages of your audit of the financial statements of Ozine Corporation for the year ended December 31, 2017, when the corporation’s president consults you. The president believes t...

Q: Assume you work as a staff member in a large accounting department

Assume you work as a staff member in a large accounting department for a multinational public company. Your job requires you to review documents relating to the company’s equipment p...

Q: I oversee the internal audit function at my company. Although we

I oversee the internal audit function at my company. Although we always use a Big Four accounting firm, we have no loyalty to any one particular firm. We hold periodic bid competitions to get the lo...

Q: Required: A list of terms and a list of definitions

Required: A list of terms and a list of definitions and examples are presented below. Make a list numbered 1 through 5 and match the letter of the most directly related definition or example with the...

Q: Required: Match each of the control procedures listed below with

Required: Match each of the control procedures listed below with the most closely related control procedures type. Your answer should pair each of the numbers 1 through 10 with the appropriate letter....

Q: The internal audit function is part of what element of the internal

The internal audit function is part of what element of the internal control system? a. Control environment b. Monitoring c. Risk assessment d. Control activities

Q: When the fraud at PepsiCo occurred, the company had five somewhat

When the fraud at PepsiCo occurred, the company had five somewhat diverse groups of divisions: food products, such as Frito-Lay, Inc.; transportation, such as northAmerican Van Lines, Inc.; sporting g...

Q: Joey Dulwich has recently been hired as a cost management specialist by

Joey Dulwich has recently been hired as a cost management specialist by Offset Press Company, a privately held company that produces a line of offset printing presses and lithograph machines. During h...

Q: The director of the internal audit department of a midsize city received

The director of the internal audit department of a midsize city received a memo from a member of the city council that included the following: I am certain that you have followed recent press reports...

Q: Select the best answer. 1. What basis of

Select the best answer. 1. What basis of accounting do enterprise and internal service funds use? 2. Which of the following is not a GASB-required statement for proprietary funds? a. Statement of ne...

Q: A city maintains an internal audit department and accounts for it in

A city maintains an internal audit department and accounts for it in its general fund. In the coming year, the department will purchase $300,000 of computer and other office equipment, all of which wi...

Q: In verifying the capital asset records of the electric utility department,

In verifying the capital asset records of the electric utility department, Jean Hanson, staff auditor of a city’s internal audit department, noted that several trucks and pieces of equipment were out...

Q: In December 2002, Time magazine named Cynthia Cooper, Coleen Rowley

In December 2002, Time magazine named Cynthia Cooper, Coleen Rowley, and Sherron Watkins as its Persons of the Year. Cynthia Cooper was vice president of internal audit for WorldCom and informed the f...

Q: Sarah Russell grew up in a small town in the flatlands of

Sarah Russell grew up in a small town in the flatlands of western Kansas where she was born. 1 In high school, she was homecoming queen, valedictorian of her graduating class, point guard on her bask...

Q: In January 2007, Matthew Neumann and Nicholas Tides, two Boeing

In January 2007, Matthew Neumann and Nicholas Tides, two Boeing employees, transferred to the company’s internal audit department. Neumann, who worked in Boeing’s Seattle headquarters, and Tides, who...

Q: During the early 1880s, David McConnell, the son of Irish

During the early 1880s, David McConnell, the son of Irish immigrants, eked out a livelihood in New York City by selling books door to door. The persistent McConnell tried one gimmick after another to...

Q: New marge Products Inc. is evaluating a new design for one

New marge Products Inc. is evaluating a new design for one of its manufacturing processes. The new design will eliminate the production of a toxic solid residue. The initial cost of the system is esti...

Q: What are the unique challenges to the global internal audit function?

What are the unique challenges to the global internal audit function?

Q: How does the nature of the internal audit function, strength of

How does the nature of the internal audit function, strength of ethical leadership, and level of moral intensity influence whether an auditor will record questionable and undocumented journal entries?...

Q: United Thermostatic Controls is a publicly owned company that engages in the

United Thermostatic Controls is a publicly owned company that engages in the manufacturing and marketing of residential and commercial thermostats. The thermostats are used to regulate temperature in...

Q: Do you believe the internal audit activity should be independent? Explain

Do you believe the internal audit activity should be independent? Explain.

Q: Consider the following independent environmental activities: a. A company

Consider the following independent environmental activities: a. A company takes actions to reduce the amount of material in its packages. b. After its useful life, a soft-drink producer returns the ac...

Q: Assume you work as a staff member in a large accounting department

Assume you work as a staff member in a large accounting department for a multinational public company. Your job requires you to review documents relating to the company’s equipment purchases....

Q: Wade Corp. has 150,000 shares of common stock outstanding

Wade Corp. has 150,000 shares of common stock outstanding. In 2012, the company reports income from continuing operations before income tax of $1,210,000. Additional transactions not considered in the...

Q: A list of committed and discretionary costs follows. Annual audit

A list of committed and discretionary costs follows. Annual audit fees Internal audit salaries Annual report preparation and printing Marketing research Building flood insurance Preventive maintenance...

Q: Agents submit a completed expense reimbursement form to their branch manager at

Agents submit a completed expense reimbursement form to their branch manager at the end of each week. The branch manager reviews the expense report to determine whether the claimed expenses are reim...

Q: An early event leading to the establishment of audit committees as a

An early event leading to the establishment of audit committees as a regular subcommittee of boards of directors occurred in 1940 as part of the consent decree relative to the Mc Kesson Robbins scanda...

Q: All organizations should have systems of internal control. Universities are no

All organizations should have systems of internal control. Universities are no exception. This site discusses the basics of internal control in a university setting. Address: www.bc.edu/offices/audit/...

Q: IBM’s Form 10-K for the year ended December 31,

IBM’s Form 10-K for the year ended December 31, 2015, includes the following section from its Report of Management found on page 74: Management Responsibility for Financial Information Responsibility...

Q: Tack, Inc., reported a Retained earnings balance of $150

Tack, Inc., reported a Retained earnings balance of $150,000 at December 31, 2016. In June 2017, Tack’s internal audit staff discovered two errors that were made in preparing the 2016 financial statem...

Q: In order to preserve auditor independence, the Sarbanes Oxley Act of

In order to preserve auditor independence, the Sarbanes Oxley Act of 2002 restricts the types of non-audit services that auditors can perform for their public‐company audit clients. The list includes...

Q: Classify the following quality costs as prevention costs, appraisal costs,

Classify the following quality costs as prevention costs, appraisal costs, internal failure costs, or external failure costs: 1. Scrap (created by defective units) 2. Certifying a vendor to ensure tha...

Q: Newmarge Products Inc. is evaluating a new design for one of

Newmarge Products Inc. is evaluating a new design for one of its manufacturing processes. The new design will eliminate the production of a toxic solid residue. The initial cost of the system is estim...

Q: Coed Scents, a national producer of young adult perfumes and colognes

Coed Scents, a national producer of young adult perfumes and colognes, needs to determine if it would be cheaper to produce 100,000 bottles of its most popular perfume, Two AM, for sale in its college...

Q: How, assume that you work in the internal audit function at

How, assume that you work in the internal audit function at a large hospital that is considering a software package to automate the process of complying with the requirements of the American Recovery...

Q: Wright Company employs a computer-based data processing system for maintaining

Wright Company employs a computer-based data processing system for maintaining all company records. The current system was developed in stages over the past 5 years and has been fully operational for...

Q: Wade Corp. has 150,000 shares of common stock outstanding

Wade Corp. has 150,000 shares of common stock outstanding. In 2017, the company reports income from continuing operations before income tax of $1,210,000. Additional transactions not considered in the...

Q: Thinken Technology recently merged with College Electronix (CE), a computer

Thinken Technology recently merged with College Electronix (CE), a computer graphics company. In performing a comprehensive audit of CE’s accounting system, Gerald Ott, internal audit manager for Thin...

Q: Why has most innovation in Data Analytics originated more in an internal

Why has most innovation in Data Analytics originated more in an internal audit than an external audit? Or if not, why not?

Q: Title III of SOX specifies requirements for the membership of the audit

Title III of SOX specifies requirements for the membership of the audit committee and its authority. All publicly traded firms must follow SOX. Required: a. Explain the role of the audit committee as...

Q: Select the best answer for each of the following. Explain the

Select the best answer for each of the following. Explain the reasons for your selection. a. Which of the following is not a covered member for an attest engagement under the Independence Rule of the...

Q: The firm of Wilson and Wiener (WW), CPAs, has

The firm of Wilson and Wiener (WW), CPAs, has had requests from a number of clients and prospective clients to perform various types of services. Please reply as to whether the appropriate independenc...

Q: Parker is the in-charge auditor for the upcoming annual audit

Parker is the in-charge auditor for the upcoming annual audit of FGH Company, a continuing audit client. Parker will supervise two assistants on the engagement and will visit the entity before the fie...

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: Monitoring is a major component of the COSO Internal Control— Integrated

Monitoring is a major component of the COSO Internal Control— Integrated Framework. Which of the following is not correct in how the company can implement the monitoring component? a. Monitoring can b...

Q: Koss Corporation is a publicly traded company that designs and sells stereo

Koss Corporation is a publicly traded company that designs and sells stereo headphones. The Koss family controls a majority of the Company’s stock. On November 17, 2010, Sujata “Sue” Sachdeva, the for...

Q: Ando Company, a diversified manufacturer, has six divisions that operate

Ando Company, a diversified manufacturer, has six divisions that operate throughout the United States and Puerto Rico. Ando has historically allowed its divisions to operate autonomously. Ando does no...

Q: For each of the following independent situations, indicate the type of

For each of the following independent situations, indicate the type of report on ICFR you would issue. Justify your report choice. a. Hansen, Inc., has restated previously issued financial statements...

Q: For each of the following independent situations relating to the audit of

For each of the following independent situations relating to the audit of ICFR, indicate the reason for and the type of audit report you would issue. a. During the audit of Wood Pharmaceuticals, you a...

Q: Select the best answer for each of the following questions. Explain

Select the best answer for each of the following questions. Explain the reason for your selection. a. Which of the following would be least likely to be considered an objective of internal control? (1...

Q: What consideration, if any, may external auditors give to the

What consideration, if any, may external auditors give to the work of a client’s internal audit staff?

Q: Internal auditing is a staff function found in virtually every large corporation

Internal auditing is a staff function found in virtually every large corporation. The internal audit function is also performed in many smaller companies as a part-time activity of individuals who may...

Q: AS5 outlines the processes for “An Audit of Internal Control over

AS5 outlines the processes for “An Audit of Internal Control over Financial Reporting That Is Integrated with an Audit of Financial Statements.” Paragraph 24 of this document lists eight entity-level...

Q: PCAOB Audit Standard No. 5 (AS5) paragraph 37 and

PCAOB Audit Standard No. 5 (AS5) paragraph 37 and Statement on Auditing Standard Section 319 (AU 319) paragraph 75 suggest that management, business process owners, and auditors prepare and analyze sy...

Q: Define corporate governance. Why do you think an effective internal audit

Define corporate governance. Why do you think an effective internal audit function is referred to as one of the cornerstones of corporate governance?

Q: Which of the following internal controls is most likely to justify a

Which of the following internal controls is most likely to justify a reduction of control risk concerning plant and equipment acquisitions? a. Periodic physical inspection and reconciliation of plant...

Q: Which of the following procedures would an auditor most likely perform to

Which of the following procedures would an auditor most likely perform to obtain evidence about the occurrence of any changes in internal control that might affect financial reporting between the end...

Q: Auditing standards primarily encourage which of the following conversations between the auditor

Auditing standards primarily encourage which of the following conversations between the auditor and another party about financial reporting? a. A conversation with those charged with governance to dis...

Q: Each of the following situations involves a possible violation by a member

Each of the following situations involves a possible violation by a member in industry of the AICPA’s Code of Professional Conduct. For each situation, indicate whether it violates the Code. If it vio...

Q: Dean Wareham, an audit manager, is preparing a proposal to

Dean Wareham, an audit manager, is preparing a proposal to provide additional services for an audit client that is a publicly held company in the manufacturing industry. The company is growing rapidly...

Q: Describe how the organizational status of the internal audit department affects its

Describe how the organizational status of the internal audit department affects its independence.

Q: You are the chief audit executive for the internal auditing function of

You are the chief audit executive for the internal auditing function of a large municipal hospital. You receive monthly financial reports prepared by the accounting department, and your review of them...

Q: Devry Corporation has established an independent foundation for the purposes of community

Devry Corporation has established an independent foundation for the purposes of community improvement. The foundation employs an executive director and eight staff people. The internal auditors of the...

Q: In order to function effectively, the internal auditor must often educate

In order to function effectively, the internal auditor must often educate auditees and other parties bout the nature and purpose of internal auditing. Required: a. Define internal auditing. b. Briefl...

Q: Steve Ankenbrandt, president of Beeb Corp., has been discussing the

Steve Ankenbrandt, president of Beeb Corp., has been discussing the company’s internal operations with the presidents of several other multidivision companies. Ankenbrandt discovered that most of them...

Q: For each of the situations listed, identify which of three principles

For each of the situations listed, identify which of three principles (integrity, objectivity and independence, or due care) from the AICPA Code of Professional Conduct that is violated. Assume all pe...

Q: LCK Corporation manufactures small tools such as hammers and screwdrivers. Many

LCK Corporation manufactures small tools such as hammers and screwdrivers. Many of LCK’s employees pocket some of the firm’s manufactured tools for their personal use. Since the quantities taken by an...

Q: The internal audit department of JTJ Corporation set up an anonymous hotline

The internal audit department of JTJ Corporation set up an anonymous hotline for reporting suspected internal control breaches. After receiving several tips through the hotline alleging breaches in JT...

Q: a. Consider the five generic AIS elements discussed in Chapter 1

a. Consider the five generic AIS elements discussed in Chapter 1. A financial statement auditor might examine input documents like purchase orders for mathematical accuracy, complete information, and...

Q: Which element of the COSO ERM framework is most closely associated with

Which element of the COSO ERM framework is most closely associated with each of the following? a. ALG Corporation bonds key employees. b. Based on previous experience, TRG Corporation’s management bel...

Q: Tinkerbell Toys Co. (Tinkerbell) is a manufacturer of children’s

Tinkerbell Toys Co. (Tinkerbell) is a manufacturer of children’s building block toys. It has been in business for more than 35 years and it sells to a wide variety of customers including large and sma...

Q: Integrated Measurement Systems Inc. (IMS) is a Canadian public

Integrated Measurement Systems Inc. (IMS) is a Canadian public company that manufactures high-end measuring devices used primarily in the oil and natural gas industries. Ted Pollock, IMSâ€&...

Q: Lily Window Glass Co. (Lily) is a glass manufacturer

Lily Window Glass Co. (Lily) is a glass manufacturer that operates from a large production facility, where it undertakes continuous production 24 hours a day, seven days a week. Also on this site are...

Q: Greystone Co. is a retailer of women’s clothing and accessories.

Greystone Co. is a retailer of women’s clothing and accessories. It operates in many countries around the world and has expanded steadily from its base in Canada. Its main market is 15- to 35-year-old...

Q: Refer to Professional Application Question 11.4 regarding Lily Window Glass

Refer to Professional Application Question 11.4 regarding Lily Window Glass Co. Now assume that you are the audit senior of Daffodil & Co. and are responsible for the audit of inventory for Lily. You w...

Q: Securimax Limited has been an audit client of KFP Partners for the

Securimax Limited has been an audit client of KFP Partners for the past 15 years Securimax is based in Waterloo, where it manufactures high-tech armour-plated personnel carriers. Securimax often has...

Q: Theobald Ltd. has an internal audit department that primarily focuses on

Theobald Ltd. has an internal audit department that primarily focuses on audits of the efficiency and effectiveness of its production departments. The other main role of the internal audit department...

Q: Mathias Co. sells cars, car parts, and gasoline from

Mathias Co. sells cars, car parts, and gasoline from 25 different locations in one country. Each branch has up to 20 staff working there, although most of the accounting systems are designed and impleme...

Q: Discuss the factors to consider when determining preliminary materiality for Securimax.

Discuss the factors to consider when determining preliminary materiality for Securimax. Questions 4.21 and 4.22 are based on the following case. Fellowes and Associates is a successful mid-tier accoun...

Q: Securimax Limited has been an audit client of KFP Partners for the

Securimax Limited has been an audit client of KFP Partners for the past 15 years. Securimax is based in Waterloo, Ontario, where it manufactures high-tech armour-plated personnel carriers. Securimax o...

Q: Robert D. Potts was a partner at Deloitte & Touche.

Robert D. Potts was a partner at Deloitte & Touche. He served as the concurring partner for audits of Kahler Corp. Kahler owned the University Park hotel, which it listed in its financial statements a...

Q: Faldo Corp. is a public company and has 100,000

Faldo Corp. is a public company and has 100,000 common shares outstanding. In 2017, the company reported income from continuing operations before income tax of $2,710,000. Additional transactions not...

Q: “You can’t write up assets,” said Nick Toby, internal

“You can’t write up assets,” said Nick Toby, internal audit director of Nadir International Inc., to his boss, Jim Majewski, vice-president and chief financial officer. “Nonsense,” said Jim, “I can do...

Q: In 2016, a worldwide study of workplace fraud found that initial

In 2016, a worldwide study of workplace fraud found that initial detections of fraud resulted from a tip (39.1%), an internal audit (16.5%), management review (13.4%), detection by accident (5.6%), ac...

Q: Gus Jackson was hired away from a "Big Four" public

Gus Jackson was hired away from a "Big Four" public accounting firm to start a new internal audit function for ABC Company, a newly acquired subsidiary of a large organization. His first task involved...

Q: You have recently joined the internal audit team at a large company

You have recently joined the internal audit team at a large company responsible for janitorial work at many different local businesses. Because of the significant number of consumables used in janitor...

Q: 1. People will often be dishonest if they are placed in

1. People will often be dishonest if they are placed in an environment of: a. Poor controls. b. High pressure. c. Low integrity. d. Loose accountability. e. All of the above. 2. Which of the fo...

Q: You are an internal auditor at Dunder Company. An employee of

You are an internal auditor at Dunder Company. An employee of Dunder has phoned in an anonymous tip that a fellow worker, Jane, might be embezzling money. Jane has been a trusted employee of the compa...

Q: Southern Paper Inc. is a global packaging company headquartered in the

Southern Paper Inc. is a global packaging company headquartered in the United States. The company was founded in the 1880s and has three principal business sectors – forest products, packaging and pap...

Q: The following questions concern auditor professional responsibilities. Choose the best

The following questions concern auditor professional responsibilities. Choose the best response. a. The concept of materiality would be least important to an auditor when considering the (1) adequacy...

Q: The following questions concern auditor responsibilities related to the identification and assessment

The following questions concern auditor responsibilities related to the identification and assessment of fraud risk. Choose the best response. a. While performing a preliminary assessment for a new cl...

Q: The following questions deal with client acceptance, audit planning, and

The following questions deal with client acceptance, audit planning, and materiality. Choose the best response. a. In which of the following circumstances would an auditor of an issuer be least likely...

Q: The following questions pertain to client acceptance. Choose the best response

The following questions pertain to client acceptance. Choose the best response. a. When approached to perform an audit for the first time, the CPA should make inquiries of the predecessor auditor. Thi...

Q: The following questions concern auditor independence. Choose the best response.

The following questions concern auditor independence. Choose the best response. a. What is the meaning of the rule that requires the auditor be independent? (1) The auditor must adopt a critical attit...

Q: In the normal course of performing their responsibilities, auditors often conduct

In the normal course of performing their responsibilities, auditors often conduct audits or reviews of the following: 1. The computer operations of a large corporation to evaluate whether the internal...

Q: Each of the following situations involves possible violations of the AICPA Code

Each of the following situations involves possible violations of the AICPA Code of Professional Conduct. For each situation, state whether it is a violation of the Code. In those cases in which it is...

Q: During audit planning, an auditor obtained the following information:

During audit planning, an auditor obtained the following information: 1. Significant operations are located and conducted across international borders in jurisdictions where differing business environ...

Q: In Part I of the case, you performed preliminary analytical procedures

In Part I of the case, you performed preliminary analytical procedures for Pinnacle (pp. 267–269). The purpose of Part II is to identify factors influencing risks and the relationship of risks to audi...

Q: Haskin Company was founded 40 years ago and now has several manufacturing

Haskin Company was founded 40 years ago and now has several manufacturing plants in the Northeast and Midwest. The evaluation of proposed capital expenditures became increasingly difficult for managem...

Q: The following questions deal with internal auditing. Choose the best response

The following questions deal with internal auditing. Choose the best response. a. The independence of the internal audit department will most likely be assured if it reports to the (1) audit committee...

Q: Marc Jackson has recently been hired as a cost accountant by Offset

Marc Jackson has recently been hired as a cost accountant by Offset Press Company, a privately held company that produces a line of offset printing presses and lithograph machines. During his first fe...

Q: Faldo Corp. is a public company and has 100,000

Faldo Corp. is a public company and has 100,000 common shares outstanding. In 2020, the company reported income from continuing operations before income tax of $2,710,000. Additional transactions not...

Q: Tack, Inc., reported a Retained earnings balance of $150

Tack, Inc., reported a Retained earnings balance of $150,000 at December 31, 20X0. In June 20X1, Tack’s internal audit staff discovered two errors that were made in preparing the 20X0 financial statem...

Q: You are a member of an internal audit department and have been

You are a member of an internal audit department and have been asked the following questions by an audit assistant: a. Why is it that we check all purchases invoices daily to goods received notes and...

Q: Your firm has been external auditor of Elgol plc for some years

Your firm has been external auditor of Elgol plc for some years. Elgol has an internal audit department engaged in both compliance and operational auditing. You have a high opinion of the quality of i...

Q: Capwell Corporation uses a periodic inventory system. The company’s ending inventory

Capwell Corporation uses a periodic inventory system. The company’s ending inventory on December 31, 2021, its fiscal-year end, based on a physical count, was determined to be $326,000. Capwell’s unad...

Q: Southern Paper Inc. is a global packaging company headquartered in the

Southern Paper Inc. is a global packaging company headquartered in the US. The company was founded in the 1880s and has three principal business sectors – forest products, packaging and papers. The...

Q: Feinstein and Company completed an internal audit of its bookkeeping system that

Feinstein and Company completed an internal audit of its bookkeeping system that uncovered several errors. It discovered the errors on December 31 before the books were closed. a. A $45,000 payment fo...

Q: WorldBiz operates divisions around the world. Its European division—EuroBiz

WorldBiz operates divisions around the world. Its European division—EuroBiz (EB)—has recently reported the following information to you at WorldBizâ€...

Q: Capwell Corporation uses a periodic inventory system. The company’s ending inventory

Capwell Corporation uses a periodic inventory system. The company’s ending inventory on December 31, 2024, its fiscal-year end, based on a physical count, was determined to be $326,000. Capwell’s unad...

Q: The Cummings Company charged various expenditures made during 2024 to an account

The Cummings Company charged various expenditures made during 2024 to an account called repairs and maintenance expense. You have been asked by your supervisor in the company’s internal audit departme...

Q: Section 404 of the Sarbanes-Oxley Act (SOX) is

Section 404 of the Sarbanes-Oxley Act (SOX) is designed to nip accounting problems in the bud, before they can blossom into fraud, by focusing on internal controls. Many companies, in complying with S...

Q: Johnson Pharmaceuticals is a large manufacturer that was highly motivated to meet

Johnson Pharmaceuticals is a large manufacturer that was highly motivated to meet quality challenges. It implemented an ISO 9000-compatible quality system to ensure not only FDA compliance requirement...

Q: Classify the following environmental activities as prevention costs, detection costs,

Classify the following environmental activities as prevention costs, detection costs, internal failure costs, or external failure costs. For external failure costs, classify the costs as societal or p...

Q: Reddy Heaters, Inc., produces insert heaters that can be used

Reddy Heaters, Inc., produces insert heaters that can be used for various applications, ranging from coffeepots to submarines. Because of the wide variety of insert heaters produced, Reddy uses a job-...

Q: Classify the following quality costs as prevention, appraisal, internal failure

Classify the following quality costs as prevention, appraisal, internal failure, or external failure. Also, label each cost as variable or fixed with respect to sales volume. 1. Quality engineering 2....

Q: Milton Manufacturing Company produces a variety of textiles for distribution to wholesale

Milton Manufacturing Company produces a variety of textiles for distribution to wholesale manufacturers of clothing products. The company’s primary operations are located in Long Isl...

Q: Jerry Maloney, CPA has been working at Mason Pharmaceuticals for fifteen

Jerry Maloney, CPA has been working at Mason Pharmaceuticals for fifteen years. Mason is a Fortune 1000 company whose stock trades on the New York Stock Exchange. He came to Mason after starting his c...

Q: PwC violated SEC rule 2-02(b) of Regulation

PwC violated SEC rule 2-02(b) of Regulation S-X and PCAOB Rule 3525 by engaging in improper professional conduct in violation of the independence rules on audit clients. This case is unique because th...

Q: Weatherford International PLC is a multinational Irish public limited company based in

Weatherford International PLC is a multinational Irish public limited company based in Switzerland, with U.S. offices in Houston, Texas. Weatherford’s shares are registered with the...

Q: Winners & Losers, Inc. (WLI) is a Nevada

Winners & Losers, Inc. (WLI) is a Nevada corporation with its principal place of business in Las Vegas. Its business model is to provide electronic sports betting in conjunction with a new law tha...

Q: The SEC bought an action against BMW NA for inaccurate disclosures of

The SEC bought an action against BMW NA for inaccurate disclosures of its retail vehicle sales volume in the United States. In order to close the gap between actual retail sales volume and internal re...

Q: In 2007, Danske Bank, Denmark’s largest bank, bought Finland’s

In 2007, Danske Bank, Denmark’s largest bank, bought Finland’s Sampo Bank, which had a tiny branch office in Tallinn, Estonia. From 2007 until 2015, €200 billion of suspicious money flowed through the...

Q: Once the largest professional services firm in the world and arguably the

Once the largest professional services firm in the world and arguably the most respected, Arthur Andersen LLP (AA) has disappeared. The Big 5 accounting firms are now the Big 4. Why did this happen? H...

Q: Walt Pavlo joined MCI in the spring of 1992. At that

Walt Pavlo joined MCI in the spring of 1992. At that time, MCI was a growth company in the booming long-distance tele- communications industry that had 15% of the long-distance market, with revenues o...

Q: By the late 1990s, Nortel Networks Corporation, headquartered in Brampton

By the late 1990s, Nortel Networks Corporation, headquartered in Brampton, Ontario, Canada, was one of the giants of the telecommunications industry. Seventy- five percent of North America’s Internet...

Q: Jérôme Kerviel joined the French bank, Société Générale (SocGen),

Jérôme Kerviel joined the French bank, Société Générale (SocGen), in 2000 at the age of twenty-three as part of its systems personnel in its back office. In 2005, he became a junior derivatives trader...

Q: David Bazzetta learned in July 2001 at a corporate audit executive committee

David Bazzetta learned in July 2001 at a corporate audit executive committee meeting in Stuttgart Germany that DaimlerChrysler “business units ‘continued to maintain secret bank accounts to bribe fore...

Q: Motivated by several corporate scan- dals in which auditors failed to

Motivated by several corporate scan- dals in which auditors failed to warn of disaster, professional accounting in the United Kingdom was under investigation for failing to act in the public interest....

Q: 1. You are a member of Arrow Company’s internal audit staff

1. You are a member of Arrow Company’s internal audit staff. A review of office practices indicates that an accounting assistant routinely makes arrangements with the bank for short-...

Q: Don’t ever tell yourself, “that won’t happen to me.”

Don’t ever tell yourself, “that won’t happen to me.” Just ask Cynthia Cooper, former Vice President of Internal Audit at WorldCom. Cynthia Cooper was a typical accounting student as an undergrad at Mi...

Q: Enron Corporation entered 2001 as the seventh largest public company in the

Enron Corporation entered 2001 as the seventh largest public company in the United States, only to later exit the year as the largest company to ever declare bankruptcy to that point in U.S. history....

Q: In December 1995, the flamboyant entrepreneur, Michael “Mickey”

In December 1995, the flamboyant entrepreneur, Michael “Mickey” Monus, formerly president and chief operating officer (COO) of the deep-discount retail chain Phar-Mor, Inc., was sentenced to 19 years...

Q: It was like riding a tiger, not knowing how to get

It was like riding a tiger, not knowing how to get off without being eaten,” according to Satyam Computer Services Limited (Satyam) former Chairman, B. Ramalinga Raju, soon after mas...

Q: John C. Koss started his first company, J.C

John C. Koss started his first company, J.C. Koss Hospital Television Rental Company, in 1953, based in Milwaukee, Wisconsin, but John had greater ambitions. Eventually he partnered with Martin Lange,...

Q: Large public companies in the U.S. are required by

Large public companies in the U.S. are required by law to engage an auditor to perform an “integrated audit” involving both a traditional financial statement audit and an audit of internal control ove...

Q: Title III of SOX specifies requirements for the membership of the audit

Title III of SOX specifies requirements for the membership of the audit committee and its authority. All publicly traded firms must follow SOX. Required a. Explain the role of the audit committee as S...