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 38IOQ
To determine
Identify the appropriate answer related to the best course of actions for the control of the company with large security portfolio.
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When an entity uses a trust company as custodian of its marketable securities, the possibility of concealing fraud most likely would be reduced if thea. Trust company has no direct contact with the entity employees responsible for maintaining investment accounting records.b. Securities are registered in the name of the trust company rather than the entity itself.c. Interest and dividend checks are mailed directly to an entity employee who is authorized to sell securities.d. The trust company places the securities in a bank safe deposit vault under the custodian’s exclusive control.
Give an example of how a CFO or Controller can fraudulently manipulate financial
statements through the use of journal entries. Separately, give an example of a
financial reporting practice that is subject to management estimates e.g. fair value
measurements of assets, goodwill, transfer pricing - and discuss internal controls that
can reduce the opportunities for unethical behavior.
1. Identify potential fraud schemes related to long-lived assets.
2. Consider the risks typically associated with tangible long-lived assets and identif the internal controls over these assets that you would expect a client to have in place
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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- Shelly Eckert has prepared the following list of statements about internal control. Identify each statement as true or false. Iffalse, indicate how to correct the statement. One of the objectives of internal control is to safeguard assets from employee theft, robbery, and a. unauthorized use. One of the objectives of internal control is to enhance the accuracy and reliability of the accounting b. records. C. No laws require U.S. corporations to maintain an adequate system of internal control. >arrow_forwardWhich of the following is not stated as a primary objective of a company's internal control policies and procedures? Multiple Choice The proper recording and authorization of transactions. The maintenance of adequate records. The prevention or detection of unauthorized activities involving a company's records. The provision of current information for outside investors and analysts. 50 Nextarrow_forward(Section 401) How does this section relate to the Enron fraud? (Section 404) How do the management assessment and auditor attestation of internal controls contained in this section help to address the risk of fraud in publicly traded organizations?arrow_forward
- Which one of the following is not an advantage of internal controls? Select one: a. It safeguards the assets b. It increases the chance of fraud c. It ensures compliance with laws d. It enhances the reliability of accounting recordsarrow_forwardWhich of the following is not a purpose of internal controls? Guarantee profits Protect assets Adherence to company policies Make fraud more difficult Accurate accounting recordsarrow_forwardThe following scenarios are taken from actual fraud cases. For each scenario, categorize as primarily indicating (A) An incentive to commit fraud (B) An opportunity to commit fraud or (C) a rationalization for committing fraud. State your reason for your answer in each scenario. 1. Top management of the company closely guards internal financial information, to the extent that even some employees on a "need to know basis" are denied full access.arrow_forward
- Answer the following questions and give an example for each case: In which areas can the embezzlement scheme be identified? What can cause fraud to be committed in the presentation of financial statements?arrow_forwardA business wishes to establish sound internal controls. What rules and processes can you recommend to help limit human fraud and error?arrow_forwardCompanies set up internal controls to protect against fraud and waste. Select one: True Falsearrow_forward
- Distinguish between a shell company fraud and pass through fraud.arrow_forwardC. Give an example and explain securities fraud in violation of the Securities Act of ‘33. D. Explain how Enron “cooked the books” with two of its accounting practicesarrow_forwardCompanies set up internal controls to protect against fraud and waste. true or falsearrow_forward
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