Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Question
Chapter 10, Problem 34QRA
a.
To determine
Explain the types of controls that should be established by a company that engages in derivative trading.
b.
To determine
Explain the
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During the current year the management of Hanover Inc. entered into a futures contract to hedge the price of silver that will be needed for the next year’s production. The contract, which is held by Hanover’s commodity broker, is marketable and exchanged on the CME Global Exchange.
Required:
Describe the types of controls that should be established by a company that engages in derivative trading.
List the substantive procedures that the auditors would use the audit this derivative.
You were assigned to audit the bond investments of JIHUZ company. The company
maintains the records and custody of its certificates, thus you have decided to
conduct a count of securities to test the existence assertion. You have asked that a person from JIHUZ company should accompany you during the count. Why is this
important?
To detect fraudulent securities
So that the company representative may assist you during the count
To acknowledge any variances during the inspection. -ry
So that the inspection of securities will be conducted in an efficient manner
In testing the valuation of the company's quoted investments in stocks measured at fair value, the auditor would most likely perform the following:
Group of answer choices
a.Obtain the market price of the investments in stocks
b.Obtain representation from the management's expert.
c.Send confirmation letter's to the company's trading agent.
d.Engage the auditor's expert.
You were assigned to audit the bond investments of JIHUZ company. The company maintains the records and custody of its certificates, thus you have decided to conduct a count of securities to test the existence assertion. You have asked that a person from JIHUZ company should accompany you during the count. Why is this important?
a.To detect fraudulent securities
b.So that the company representative may assist you during the count
c.To acknowledge any variances during the inspection.
d.So that the inspection of securities will be conducted in an efficient manner.
The treasury department…
Chapter 10 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQ
Ch. 10 - Prepare an example of lapping of cash receipts,...Ch. 10 - Prob. 12RQCh. 10 - Prob. 13RQCh. 10 - Prob. 14RQCh. 10 - Prob. 15RQCh. 10 - Prob. 16RQCh. 10 - Explain two procedures by which auditors may...Ch. 10 - Prob. 18RQCh. 10 - Prob. 19RQCh. 10 - Prob. 20RQCh. 10 - Prob. 21RQCh. 10 - Prob. 22RQCh. 10 - Prob. 23RQCh. 10 - Prob. 24RQCh. 10 - Prob. 25RQCh. 10 - Prob. 26QRACh. 10 - Henry Mills is responsible for preparing checks,...Ch. 10 - During the first few months of the year, John...Ch. 10 - Prob. 29QRACh. 10 - Prob. 30QRACh. 10 - Prob. 31QRACh. 10 - Prob. 32QRACh. 10 - Prob. 33QRACh. 10 - Prob. 34QRACh. 10 - Prob. 35QRACh. 10 - Prob. 36QRACh. 10 - Prob. 37QRACh. 10 - Select the best answer for each of the following...Ch. 10 - Prob. 38BOQCh. 10 - Prob. 38COQCh. 10 - Prob. 38DOQCh. 10 - Prob. 38EOQCh. 10 - Prob. 38FOQCh. 10 - Reconciliation of the bank account should not be...Ch. 10 - The auditors suspect that a clients cashier is...Ch. 10 - Prob. 38IOQCh. 10 - Prob. 38JOQCh. 10 - Prob. 38KOQCh. 10 - Prob. 38LOQCh. 10 - Which of the following represents a correct...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Which of the following correctly identifies a risk...Ch. 10 - Prob. 39DOQCh. 10 - Prob. 39EOQCh. 10 - Prob. 39FOQCh. 10 - Prob. 40OQCh. 10 - Prob. 41OQCh. 10 - Prob. 42OQCh. 10 - Prob. 43OQCh. 10 - Prob. 44OQCh. 10 - Prob. 45OQCh. 10 - Prob. 46PCh. 10 - Prob. 47PCh. 10 - Prob. 48PCh. 10 - Prob. 49PCh. 10 - Prob. 50ITCCh. 10 - Prob. 51ITCCh. 10 - Prob. 52RDCCh. 10 - Prob. 53EC
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Similar questions
- You were assigned to audit the bond investments of ABCcompany. The company maintains the records and custody of its certificates, thus you have decided to conduct a count of securities to test the existence assertion. You have asked that a person from ABCcompany should accompany you during the count. Why is this important? Group of answer choices To detect fraudulent securities So that the company representative may assist you during the count To acknowledge any variances during the inspection. So that the inspection of securities will be conducted in an efficient manner.arrow_forwardIn testing the valuation of the company's quoted investments in stocks measured at fair value, the auditor would most likely perform the following: a. Obtain the market price of the investments in stocks b. Obtain representation from the management's expert. c. Send confirmation letter's to the company's trading agent. d. Engage the auditor's expert.arrow_forwardIn testing the valuation of the company's quoted investments in stocks measured at fair value, the auditor would most likely perform the following: Obtain the market price of the investments in stocks Obtain representation from the management's expert. Send confirmation letter's to the company's trading agent. Engage the auditor's expert.arrow_forward
- When auditing an investment in another company, an auditor most likely would seek to conduct which audit procedure to help satisfy the valuation assertion?a. Inspect the stock certificates evidencing the investment.b. Examine the audited financial statements of the investee company.c. Review the broker’s advice or canceled check for the investment’s acquisition.d. Obtain market quotations from The Wall Street Journal or another independent source.arrow_forwardCrush Ltd. is a dealer in fast moving consumer goods. The Company has warehousesthroughout the country where the stocks are stored. The Auditor of the Company normally conduct physical verification of stocks along with the Management at the end of thefinancial year. However, the Auditor could not be physically present during stock- taking at two places on account of certain disturbances in the region.In the light of the above facts: (hint: Audit evidence)(i) How sufficient appropriate audit evidence regarding the condition and existence of inventory may be obtained?(ii) How an Auditor is supposed to deal when attendance at physical inventory counting is impracticable?arrow_forwardDuring the auditor's risk assessment procedures, a meeting was held together with the company's management. During the meeting, management has discussed that the company recently acquired bond securities from various government agencies and publicly listed shares. In light of this, the audit senior asked the management about the company's investment policy, risk appetite and investment objectives. The audit senior's inquiry would most likely address which assertion? a. Rights and obligations b. Occurence c. Completeness d. Valuationarrow_forward
- In testing the valuation of the company's quoted investments in stocks measured at fair value, the auditor would most likely perform the following: Group of answer choices Obtain the market price of the investments in stocks Obtain representation from the management's expert. Send confirmation letter's to the company's trading agent. Engage the auditor's expert.arrow_forwardYou are planning the audit of Bluechip Ltd, a company with investments in listed securities that you consider to have a low level of inherent risk. What is the most appropriate level of planning materiality for the 30 June 2021 audit given the following balances: (all amounts are in $'000) Sales: 1200 (2021); 1080 (2020); 960 (2019) Profit: 15.5 (2021); 127.1 (2020): -108.5 (2019) Current assets: 1990 (2021); 1791 (2020); 1592 (2019) a. 1.6 b. 0.8 c. 19.9 d. 12.0arrow_forwardAssume an auditor wishes to execute a meaningful analytical technique to offer audit evidence to assess EarthWear's $983,00 interest expense valuation or allocation allegation in 2018. The auditor will accomplish this by calculating an estimate of what the interest cost should be. What is a fair expectation estimate for the auditor?arrow_forward
- 1. The London, Tokyo and New York Stock Exchanges, Ghana, among others, require an annual audit of the financial statements of companies whose securities are listed on it. What are the possible reasons for this? 2. Distinguish between absolute and reasonable assurance. Identify the type of assurance that is expected in an audit of the financial statements, clearly outlining the reasons to justify your point of view.arrow_forwardStatement 1: Common to future purchase commitments is the fact that they should be recorded as liabilities at discounted values as of year-end. Statement 2: Analytical procedures are required as a part of the. Internal control assessment. Statement 3: Auditors should perform audit procedures relating to subsequent events through issuance of the audit report. A. only one statement is true B. only two statements are true C. All are true D. All are falsearrow_forwardYou are an audit manager at Foyer & Associates and have been assigned to the audit of Modern Electrical Limited (MEL) for the year ending 30 June 2021. During the planning stage of the audit, you become aware of the following matters: a.MEL has significant loans from its bank. The bank has Indicated that it is concerned about MEL'S ability to meet specific loan covenants, particularly the return on total assets (net b. The aped trade accounts receivable listing indicates that the percentage of accounts receivable exceeding 90 days has jumped from 15 per cent to 37.5 per cent during the last 12 months. The credit manager hasindicated that the is because some of MEL'S Customers are currently'experiencing financial difficulty. This question.includos Part A and B part- a for each of the following scenerio describe briefly how this matter is a fraud audit risk factor in relation to mel's financial report.arrow_forward
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