Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 15, Problem 18RQ
To determine
Explain the work on the capital stock account in the initial audit and in the further audit engagement.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
You have recently been appointed as auditor to Johnson Plc; a company whose shares are traded on the Stock Exchange. The Directors of Johnson Plc have recommended that you perform the following services .
(i) The statutory audit of the annual financial statements.
(ii) Taxation services, and
(iii) Consistency services in respect of the implementation of a new information technology system Your firm has not acted for Johnson Plc before but does act as auditor for one of the major competitors.
Required.
(a) Identify and explain the professional and ethical issues that should have been identified by your firm in relation to the provision of the services outlined above, and describe the safeguards that should be in place in order to address these issues. (Include citations to support work).
(b) What are the fundamental principles of ethics? Briefly explain their meaning (Include citations to support work).
(c) A client’s affairs should not be disclosed to third parties. However where a…
Assume that you will be unable to inspect the securities owned by the client on the balance sheet date. What changes should be made to audit procedures if the inspection is not performed until two weeks after the balance sheet date?
you have recently been appointed as auditor to Johnson Plc; a company whose shares are traded on the Stock Exchange. The Directors of Johnson Plc have recommended that you perform the following services .
(i) The statutory audit of the annual financial statements.
(ii) Taxation services, and (iii) Consistency services in respect of the implementation of a new information technology system Your firm has not acted for Johnson Plc before but does act as auditor for one of the major competitors.
(a) Identify and explain the professional and ethical issues that should have been identified by your firm in relation to the provision of the services outlined above, and describe the safeguards that should be in place in order to address these issues. (including Citations/references)
(b) What are the fundamental principles of ethics? Briefly explain their meaning (including Citations/references)
(c) A client’s affairs should not be disclosed to third parties. However where a client has been…
Chapter 15 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 15 - What does the trust indenture used by a...Ch. 15 - Long-term creditors often insist upon placing...Ch. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Mansfield Corporation has outstanding an issue of...Ch. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - What do you consider to be the most important...Ch. 15 - What is the primary responsibility of an...Ch. 15 - In the audit of a small corporation that issues...Ch. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Prob. 19RQCh. 15 - Corporations sometimes issue their own capital...Ch. 15 - Prob. 21RQCh. 15 - Prob. 22RQCh. 15 - Prob. 23RQCh. 15 - Prob. 24RQCh. 15 - Prob. 25RQCh. 15 - Prob. 26RQCh. 15 - Prob. 27QRACh. 15 - Prob. 28QRACh. 15 - Prob. 29QRACh. 15 - You are retained by Columbia Corporation to audit...Ch. 15 - Prob. 31QRACh. 15 - Prob. 32AOQCh. 15 - Prob. 32BOQCh. 15 - Prob. 32COQCh. 15 - Prob. 32DOQCh. 15 - Prob. 32EOQCh. 15 - When a client uses paper stock certificates, an...Ch. 15 - Prob. 32GOQCh. 15 - The auditors can best verify a clients bond...Ch. 15 - Prob. 32IOQCh. 15 - All corporate capital stock transactions should...Ch. 15 - Prob. 32KOQCh. 15 - Prob. 32LOQCh. 15 - Prob. 32MOQCh. 15 - Prob. 32NOQCh. 15 - Prob. 32OOQCh. 15 - An auditor most likely would inspect loan...Ch. 15 - Prob. 32QOQCh. 15 - Match the following definitions (or partial...Ch. 15 - Prob. 34PCh. 15 - Prob. 35PCh. 15 - Prob. 36PCh. 15 - Prob. 37P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- You have recently been appointed as auditor to Johnson Plc; a company whoseshares are traded on the Stock Exchange. The Directors of Johnson Plc haverecommended that you perform the following services .(i) The statutory audit of the annual financial statements.(ii) Taxation services, and(iii) Consistency services in respect of the implementation of a new informationtechnology systemYour firm has not acted for Johnson Plc before but does act as auditor for one of themajor competitors.Required.(a) Identify and explain the professional and ethical issues that should have beenidentified by your firm in relation to the provision of the services outlined above,and describe the safeguards that should be in place in order to address theseissuesarrow_forwardYou have recently been appointed as auditor to Johnson Plc; a company whoseshares are traded on the Stock Exchange. The Directors of Johnson Plc haverecommended that you perform the following services .(i) The statutory audit of the annual financial statements.(ii) Taxation services, and(iii) Consistency services in respect of the implementation of a new informationtechnology systemYour firm has not acted for Johnson Plc before but does act as auditor for one of themajor competitors.Required. (b) What are the fundamental principles of ethics? Briefly explain their meaningarrow_forwardYou have recently been appointed as auditor to Johnson Plc; a company whoseshares are traded on the Stock Exchange. The Directors of Johnson Plc haverecommended that you perform the following services .(i) The statutory audit of the annual financial statements.(ii) Taxation services, and(iii) Consistency services in respect of the implementation of a new informationtechnology systemYour firm has not acted for Johnson Plc before but does act as auditor for one of themajor competitors. (c) A client’s affairs should not be disclosed to third parties. However where a clienthas been guilty of an unlawful act, to whom should the auditor disclose this, andin what order ?arrow_forward
- You are an employee of Dick and Associates’ Auditing Firm. The company take on an engagement to audit Full Bright Company Limited. The engagement was divided into segments such as receivables, payables, cash and bank, inventories and non- current assets and each segment is headed by an audit senior. The audited of the non -current assets was assigned to you. After reviewing the financial statement, you re-cognized that non-current assets values 500 million and current assets values 400 million. A machine values 250 million was acquired by Full Bright Co. Ltd during the period under audit. You also noticed that the Depreciation on some of the assets were not calculated properly. The company did not keep a fixed asset registry. NB. The company has no Goodwill. a) Discuss at least four (4) audit procedures you would perform in completing your audit on the non-current assets. b)…arrow_forwardYou are an audit supervisor assigned to a new client which is listed on a Stock Exchange. You visited the corporate headquarters to become acquainted with key personnel and to conduct a preliminary review of the company’s accounting policies, controls, and systems. During this visit, (b) You recognized the treasurer who was convicted of fraud several years ago. Identify the problems and explain them in relation to the internal environment.arrow_forwardThe following audit procedures are commonly performedby auditors in the verification of owners’ equity:1. Review the articles of incorporation and bylaws for provisions about owners’ equity.2. Analyze all owners’ equity accounts for the year and document the nature of anyrecorded change in each account.3. Account for all certificate numbers in the capital stock book for all shares outstanding.4. Examine the stock certificate book for any stock that was cancelled.5. Review the minutes of the board of directors’ meetings for the year for approvalsrelated to owners’ equity.6. Recompute earnings per share.7. Review debt provisions and senior securities with respect to liquidation preferences,dividends in arrears, and restrictions on the payment of dividends or the issue of stock.a. State the purpose of each of these seven audit procedures.b. List the type of misstatements the auditors can uncover by the use of each auditprocedure.arrow_forward
- Subsequent Events and Subsequently Discovered Facts. Michael Ewing is auditing the financial statements of Dallas Company for the year ended December 31, 2017. In concluding the process of gathering sufficient appropriate evidence, Ewing has asked to meet with his supervisor on the audit (John Ross) to discuss responsibility for events occurring afterthe date of the financial statements.Required:a. What is a subsequent event? During what time period is Ewing responsible for subsequent events?b. List some procedures that Ewing may perform to assist him in identifying subsequent events.c. What are two types of subsequent events? How should information related to these types of subsequent events be reflected in Dallas’s financial statements?d. Assume that on January 8, 2018, Dallas Company agreed to acquire Houston Inc. in a significant transaction. The date of Ewing’s report was February 7, 2018, and Dallas issued its financial statements (and Ewing’s reports on its financial statements…arrow_forwardBank Oman is a publicly traded company. You were part of the team that was hired to conduct an audit of the financial statements of the company for the previous year. After detailed examination of controls and transactions, you discovered a few immaterial misstatements in their accounting practices which were immediately corrected by management. These misstatements include errors in the computation of depreciation and valuation of the inventory. In this situation, what type of audit report could your team possibly give to Bank Oman? a. Qualified opinion b. Adverse opinion c. Disclaimer of opinion d. Unqualified opinionarrow_forwardCommon Stock and Treasury Stock: Substantive Audit Procedures. You are the continuing auditor of Sussex Inc. and are beginning the audit of the common stock and treasury stock accounts. You have decided to design substantive procedures with reliance on internal controls.Sussex has no-par, no-stated-value common stock and acts as its own registrar and transfer agent. During the past year, Sussex both issued and reacquired shares of its own common stock, some of which the company still owned at year-end. Additional common stock transactions occurred among the shareholders during the year.Common stock transactions can be traced to individual shareholders’ accounts in a subsidiary ledger and to a stock certificate book. The company has not paid any cash or stock dividends. There are no other classes of stock, stock rights, warrants, or option plans.Required:What substantive procedures should you apply in examining the common stock and treasury stock accounts? Organize your answer as a list…arrow_forward
- Your answer is partially correct. As an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clients. 1. Windsor, Inc. is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 3,000 shares of its $20 par value common stock. The owners' asking price for the land was $126,000, and the fair value of the land was $115,500. 2. Sheridan Company is a publicly held corporation whose common stock is traded on the securities markets. On June 1, it acquired land by issuing 20,000 shares of its $10 par value stock. At the time of the exchange, the land was advertised for sale at $268,500. The stock was selling at $11 per share. Prepare the journal entries for each of the situations above. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the…arrow_forwardAs an auditor for the CPA firm of Hinkson and Calvert, you encounter the following situations in auditing different clients. 1. Bramble Corp. is a closely held corporation whose stock is not publicly traded. On December 5, the corporation acquired land by issuing 5,000 shares of its $19 par value common stock. The owners’ asking price for the land was $123,500, and the fair value of the land was $117,000. 2. Crane Company is a publicly held corporation whose common stock is traded on the securities markets. On June 1, it acquired land by issuing 21,000 shares of its $10 par value stock. At the time of the exchange, the land was advertised for sale at $275,000. The stock was selling at $11 per share. Prepare the journal entries for each of the situations above. (Record journal entries in the order presented in the problem. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the…arrow_forwardConsider each of the following independent situations which have come to your attention. Ineach of the following independent and material situations assume that the client is areporting entity and that a general-purpose financial report has been prepared and audited: The annual report of Ranger Limited includes a detailed graph showing revenue for the last 10 years. You note that there are some inconsistencies between the graph and the figures in the audited financial report. Management does not want to change the graph because it would involve increased printing costsarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning