Which of the following best describes the auditors' typical observation of plant and equipment? The auditors observe all additions to plant and equipment made during the year. The auditors observe major additions to plant and equipment made during the year. The auditors observe a physical inventory of plant and equipment, annually. The auditors observe all major plant and equipment items in the clients' accounts each year.

Which of the following best describes the auditors' typical observation of plant and equipment? The auditors observe all additions to plant and equipment made during the year. The auditors observe major additions to plant and equipment made during the year. The auditors observe a physical inventory of plant and equipment, annually. The auditors observe all major plant and equipment items in the clients' accounts each year.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter9: Auditing The Revenue Cycle.

Section: Chapter Questions

Problem 37RQSC

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As you are planning the annual audit of Norton Corporation, you note at the company has a number of user operated computers in use in various locations. One of the machines has been installed in the stores department, which has the responsibility for disbursing stock items and for maintaining stores records. In your audit, you find that one employee receives the requisitions for stores, disburses the stock, maintains the records, operates the computer, and authorizes adjustments to the total amounts of stock recorded by the computer. When you discuss the applicable controls with the department manager, you are told that the user operated computer is assigned exclusively to that department. Therefore, the manager contends that it does not require the same types of controls applicable to large IT systems. b. Discuss five types of control that would apply to this microcomputer application.
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As you are planning the annual audit of Norton Corporation, you note that the company has a number of user operated computers in use in various locations. One of the machines has been installed in the stores department, which has the responsibility for disbursing stock items and for maintaining stores records. In your audit, you find that one employee receives the requisitions for stores, disburses the stock, maintains the records, operates the computer, and authorizes adjustments to the total amounts of stock recorded by the computer. When you discuss the applicable controls with the department manager, you are told that the user operated computer is assigned exclusively to that department. Therefore, the manager contends that it does not require the same types of controls applicable to large IT systems. a. Comment on the manager’s contention.
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The auditors use an analytical procedures during the course of an audit. The most important phase of performing these procedures is the: Vouching of all data supporting various rates, Investigation of significant variations and unusual relationships, Comparison of client-computed statistics with industry data on a quarterly and full-year basis
Zest Airlines Philippines (FTG) FTG & CO. an accounting and auditing firm was engaged by Zest Airlines Philippines to audit the company for reporting year ended December 31, 2020. You were assigned by FTG to plan the audit, and based on your experienced of the environment, your team will focus on property, plant and equipment material risk that might arise. Based on the your examination and test of record you traced the following transactions: On January 1, 2020, Zest Airlines contracted with LIPAD Aircraft to construct an aircraft to Zest’s specifications at a cost ofP20,000,000. During 2020, Zest paid LIPADP4,000,000 on January 1, and anotherP2,500,000 on September 30. On the same day, January 1, Zest borrowed P3,600,000 at 13% to partially finance the construction, an obligation still outstanding at the end of 2020. The…

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		The auditors observe all additions to plant and equipment made during the year.
		The auditors observe major additions to plant and equipment made during the year.
		The auditors observe a physical inventory of plant and equipment, annually.
		The auditors observe all major plant and equipment items in the clients' accounts each year.