Chapter 1, Problem 36DQ

What are the primary types of tax audits conducted by taxing authorities? a) Random audits and targeted audits b) Field audits and desk audits c) Pre - filing audits and post - filing audits d) Internal audits and external audits

The date of the CPA’s opinion on the financial statements of the client should be the date of the: Select one: a. submission of the report to the client. b. closing of the client’s books. c. finalization of the terms of the audit engagement d. completion of all important audit procedures

Explain what is meant by determining the degree of correspondencebetween information and established criteria. What are the information and establishedcriteria for the audit of Jones Company’s tax return by an internal revenue agent? Whatare they for the audit of Jones Company’s financial statements by a CPA firm?

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Which non-audit service may be provided to an SEC audit client?   A- )Preparing the annual tax returns for review and approval by the client.   B- )Designing the future state operating model for its finance and accounting functions.   C- )Performing a valuation to support the client’s legal claim.   D- )Developing, managing and executing portions of its internal audit plan.

You are involved with the audit of Jelco Company for year 1 and have been asked to consider the confirmation reply results indicated below. For each confirmation reply, select the proper action to be taken from the following possible actions: (Each of the "Action" items may be used once, more than once, or not at all.) (1)Exception; propose an adjustment. (2)Send a second confirmation request to the customer. (3) Examine shipping documents and/or subsequent cash receipts. (4)Verify whether the additional invoices noted on the confirmation reply pertain to the year under audit or the subsequent year. (5) Not an exception; no further audit work is necessary. Proper Action Customer Reply (and any audit action already taken) a. "We mailed the check for this on December 31." "We returned those goods on December 2." You have been able to determine that the goods were received by the client on December 29, but not recorded until January 2. c. "We also owe for two more invoices for purchases…

The preparation of audit documentation is an integral part of an auditor’s examination of financial statements. On a recurring engagement, auditors review the audit plans and audit documentation from the prior audit while planning the current audit to determine their usefulness for the current-year work.Required:a. (1) What are the purposes or functions of audit documentation?    (2) What records may be included in audit documentation?b. What factors affect the auditors’ judgment of the type and content of the audit documentation for a particular engagement?c. What should be included in audit documentation to support auditors’ compliance with generally accepted auditing standards?d. How can auditors make the most effective use of the prior-year audit plans in a recurring audit?

Which of the following types of documentary evidence should the auditor consider the most reliable?a. Sales invoice created by the client with the support of proof of delivery from an outside delivery serviceb. Confirmation of debt balances sent and returned directly to the auditorc. Check made by the company and includes a sign of approval of the party receiving the money, which is included in the bank statement sent directly to the auditord. An audit list prepared by the client controller and reviewed by the client treasurer.

Indicate which of the following statements are true or false: ________The IRS is a division of the Treasury Department. ________The IRS has four major divisions. ________The IRS local offices process most individual tax returns. ________IRS Campus Processing Sites are the locations that taxpayers should call to obtain tax information. ________Taxpayers should have their CPAs keep their tax records to prevent the IRS from being able to summon their records. ________Most IRS audits are conducted through the mail.