Explanation Error or fraud in the financial statement: When there is a misstatement of the financial statements of the company because of the intentional and unintentional error then it is known as error or fraud in the financial statement. Audit procedures : Audit procedures are the process of evaluating the quality of the financial information provided in the financial statements of the company. The audit procedure varies from company to company. It is a comparison of the financial and non-financial data of the clients. Indicate the auditing procedure for the possible misstatement due to error and fraud: Possible Misstatements Due to Errors and Fraud List of Auditing Procedures The auditor suspects that a kiting scheme exists because an accounting department employee who can issue and record checks seems to be leading an unusually luxurious lifestyle. E An auditor suspects that the controller wrote several checks and recorded the cash disbursements just before year-end but did not mail the checks until after the first week of the subsequent year. D The entity borrowed funds from a financial institution. Although the transaction was properly recorded, the auditor suspects that the loan created a lien on the entity’s real estate that is not disclosed in its financial statements. H The auditor discovered an unusually large receivable from one of the entity’s new customers. The auditor suspects that the receivable may be fictitious because the auditor has never heard of the customer and because the auditor’s initial attempt to confirm the receivable has been ignored by the customer. K, L The auditor suspects that fictitious employees have been placed on the payroll by the entity’s payroll supervisor, who has access to payroll records and to the paychecks P The auditor suspects that selected employees of the entity received unauthorized raises from the entity’s payroll supervisor, who has access to payroll records...

Principles Of Auditing & Other Assurance Services

21st Edition

ISBN: 9781259916984

Author: WHITTINGTON, Ray, Pany, Kurt

Publisher: Mcgraw-hill Education,

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Chapter 10, Problem 40OQ

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Indicate the auditing procedure for the possible misstatement due to error and fraud.

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Chapter 10, Problem 39FOQ

Chapter 10, Problem 41OQ

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To obtain an understanding of a continuing client in planning an audit, an auditor most liky would; A. Perform test of details of transactions and balances B. Read internal audit reports. C. Read Specialized industry journals. D. Reevaluate the risks of material misstatement

In planning the audit, an auditor takes three basic steps in determining the audit procedures to be performed for any business cycle or class of transactions in order to gather audit evidence concerning possible misstatement due to error or fraud. List those three basic steps below.

Questions - Images to these questions are attached below. (a) Recommend SIX tests of controls the auditor would normally carry out on the sales system of Tinkerbell, and explain the objective for each test. (b) Describe substantive procedures the auditor should perform to confirm Tinkerbell’s yearend receivables balance (c) Identify and explain controls Tinkerbell should implement to reduce the risk of fraud occurring again and, for each control, describe how it would mitigate the risk. (d) Describe substantive procedures the auditor should perform to confirm Tinkerbell’s revenue.

Chapter 10 Solutions

Principles Of Auditing & Other Assurance Services

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Ch. 10 - Prepare an example of lapping of cash receipts,...Ch. 10 - Prob. 12RQ Ch. 10 - Prob. 13RQ Ch. 10 - Prob. 14RQ Ch. 10 - Prob. 15RQ Ch. 10 - Prob. 16RQ Ch. 10 - Explain two procedures by which auditors may...Ch. 10 - Prob. 18RQ Ch. 10 - Prob. 19RQ Ch. 10 - Prob. 20RQ Ch. 10 - Prob. 21RQ Ch. 10 - Prob. 22RQ Ch. 10 - Prob. 23RQ Ch. 10 - Prob. 24RQ Ch. 10 - Prob. 25RQ Ch. 10 - Prob. 26QRA Ch. 10 - Henry Mills is responsible for preparing checks,...Ch. 10 - During the first few months of the year, John...Ch. 10 - Prob. 29QRA Ch. 10 - Prob. 30QRA Ch. 10 - Prob. 31QRA Ch. 10 - Prob. 32QRA Ch. 10 - Prob. 33QRA Ch. 10 - Prob. 34QRA Ch. 10 - Prob. 35QRA Ch. 10 - Prob. 36QRA Ch. 10 - Prob. 37QRA Ch. 10 - Select the best answer for each of the following...Ch. 10 - Prob. 38BOQ Ch. 10 - Prob. 38COQ Ch. 10 - Prob. 38DOQ Ch. 10 - Prob. 38EOQ Ch. 10 - Prob. 38FOQ Ch. 10 - Reconciliation of the bank account should not be...Ch. 10 - The auditors suspect that a clients cashier is...Ch. 10 - Prob. 38IOQ Ch. 10 - Prob. 38JOQ Ch. 10 - Prob. 38KOQ Ch. 10 - Prob. 38LOQ Ch. 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. 39DOQ Ch. 10 - Prob. 39EOQ Ch. 10 - Prob. 39FOQ Ch. 10 - Prob. 40OQ Ch. 10 - Prob. 41OQ Ch. 10 - Prob. 42OQ Ch. 10 - Prob. 43OQ Ch. 10 - Prob. 44OQ Ch. 10 - Prob. 45OQ Ch. 10 - Prob. 46P Ch. 10 - Prob. 47P Ch. 10 - Prob. 48P Ch. 10 - Prob. 49P Ch. 10 - Prob. 50ITC Ch. 10 - Prob. 51ITC Ch. 10 - Prob. 52RDC Ch. 10 - Prob. 53EC

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Indicate the auditing procedure for the possible misstatement due to error and fraud.

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Indicate the auditing procedure for the possible misstatement due to error and fraud.

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Chapter 10 Solutions