C avoid duplicating the work performed by the internal audit staff. A limitation of an audit is caused by a. A It is difficult to transfer ownership of corporations compared to that of sole proprietorships. Description Disclosure of significant accounting policies. A primary characteristic that distinguishes governmental entities from business entities is a The need.
D Discussions with management regarding separation of duties. Auditors are experts and do not need to look at much to know whether the financial statements are correct or not. Although the firm paid in full for the merchandise during the year, it is yet to collect at year end from the customer. B Fraud is an intentional misstatement of the financial statements. Answer: A compliance audit involves gathering evidence to ascertain whether the person or entity under review has followed the rules, policies, procedures, laws and regulations with which they must conform. We do not offer refund once the order is completed. B internal control deficiencies that could adversely affect a company's ability to initiate, record, process, or report external financial statements reliably.
In other words, physical controls do not suggest an environment in which clerks update paper accounts with pen and ink. Correct answer: a Learning Objective 1. B Revenue is recognized when a customer pays cash. B to evaluate the effectiveness of the company's internal controls over all relevant assertions in the financial statements. C flagrant violations of the entity's documented conflict-of-interest policies. The importance to the accounting profession of the Sarbanes-Oxely Act is that a.
The presentation and disclosure assertion alleges that financial statement items are correctly classified e. In other words, it is technically possible for auditors to find internal controls over financial reporting to be weak, but conclude through substantive tests that the weaknesses did not cause the financial statements to be materially misrepresented. To make a business survive d. Differences between financial and managerial accounting. How is the expectation gap caused and how can the effects expectation gap be reduced? Conflicts of interest often occur between absentee owners and managers. What is a Solution Manual? B procedures performed by the internal audit staff may eliminate the independent auditor's need for an extensive study and evaluation of internal control.
Corporate social reporting disclosures include environmental, employee and social reporting. B increase the depth of the study and evaluation of administrative controls. D place limited reliance on the work performed by the internal audit staff. A inadequate documentation is not a control deficiency B documentation needs to focus on interim controls C documentation needs to have some focus on controls designed to detect fraud D documentation should only focus on system design 17 The independent auditor should acquire an understanding of the internal audit function as it relates to the independent auditor's study and evaluation of internal control because the: A audit programs, working papers, and reports of internal auditors can often be used as a substitute for the work of the independent auditor's staff. Decision makers demand reliable information that is provided by accountants.
B Significant personal financial obligations. C disclose the fraud to the appropriate level of management or to the audit committee. Which of the following best describes lapping? B achievement of the objectives of internal control. Recognize the basic principles, objectives and ethical requirements of audit and assurance services. Which of the following is true of sole proprietorships and corporations? Which of the following is one of the positive benefits of an effective ethics program? B state law through a licensing department or agency of each state.
The study of international business helps prepare you a. Determine if a public school is properly applying their reimbursement for the payment-inkind program. A financial statement audit is conducted to determine whether financial statements are stated in accordance with specified criteria, normally the U. In addition, their responsibilities include all the following except: A reviewing the reliability and integrity of information. What steps does this entail? None of the above Answer: C Conceptual, International Business, p.
Correct answer: a Learning Objective 1. C Credit limits for various classes of customers. Chapter 1 Multiple-Choice Questions 1. An assurance engagement can be defined as a. Correct answer: b Learning Objective 1. Which of the following statements best describes a relationship between sample size and other elements of auditing? Only current investors not potential investors are considered to be users of the financial statements.