Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 16, Problem 2RQ
To determine
Identify whether the negative confirmation request can be used to reduce audit risk while auditing books of accounts.
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During the audit of Millennium Corporation, the audit firm, Tyson CPAs has advised firm management that they plan to confirm a
sample of accounts receivable balances with a randomly selected pool of the client's customers. The client has refused permission for
the auditors to undertake this procedure, citing customer privacy over balances owed to the firm. At this juncture, what might the
auditors decide to do?
Ⓒ The auditors are most likely to consider withdrawing from the engagement. If management is uncooperative, it is probably
because they are hiding fraud or other material errors.
O The auditors are likely to proceed with contacting a sample of accounts receivable customers anyway. As these customers
represent third parties, the auditor does not need the client's expressed permission to contact them.
O The auditors may attempt perform alternative audit procedures. If they are able to do this, they may be able to offer the
same level of assurance in this…
As an auditor, you run across some abnormalities in a company’s books. What you find, makes you a bit suspicious, by you do not see any reason that this would be fraud or embezzlement, they are just not following GAAS. You decide to issue an opinion letter – what should you do when issuing the opinion letter?
Group of answer choices
A. Issue a qualified opinion, which states that you see a specific error
B.Issue an adverse opinion, where you point out that their financials are not created according to GAAS
C. Report them immediately to the SEC
D. Nothing, the letter should stand on it’s own
Respond to each of the following comments that you heard related to the audit of Swan Company, a public entity.a. “We don’t need to consider the risk of material misstatement in our work because we really can’t do anything to reduce that risk.”b. “Because the client has not implemented effective internal controls, we need to gather more reliable evidence. This means we need to test a greater number of transactions and obtain more reliable forms of evidence.”c. “We will really need to spend a lot of time and effort on this audit. Because this client has just filed for a bond offering, we can’t allow for any misstatements in the financial statements. We need to guarantee the accuracy of the client’s financial statements.”d. “Because this company has $140 million in revenues, we really shouldn’t be concerned about smaller accounts because they are not likely to have a major impact on the financial statements.”e. “I know it will be more time consuming and expensive, but we are required to…
Chapter 16 Solutions
Auditing And Assurance Services
Ch. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Prob. 3RQCh. 16 - Prob. 4RQCh. 16 - Explain why you agree or disagree with the...Ch. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - Prob. 8RQCh. 16 - Prob. 9RQCh. 16 - Prob. 10RQ
Ch. 16 - Prob. 11RQCh. 16 - Under what circumstances is it acceptable to...Ch. 16 - Prob. 13RQCh. 16 - Prob. 14RQCh. 16 - Prob. 15RQCh. 16 - Prob. 16RQCh. 16 - Prob. 17RQCh. 16 - Prob. 18RQCh. 16 - Prob. 19RQCh. 16 - Prob. 20.1MCQCh. 16 - Prob. 20.2MCQCh. 16 - Prob. 20.3MCQCh. 16 - The following questions deal with confirmation of...Ch. 16 - Prob. 21.2MCQCh. 16 - Prob. 21.3MCQCh. 16 - Prob. 22.1MCQCh. 16 - Prob. 22.2MCQCh. 16 - Prob. 22.3MCQCh. 16 - Prob. 23.1MCQCh. 16 - Which of the following is least likely to be a...Ch. 16 - The following questions concern auditor...Ch. 16 - Prob. 24DQPCh. 16 - Prob. 25DQPCh. 16 - Prob. 26DQPCh. 16 - The following misstatements are sometimes found in...Ch. 16 - Prob. 28DQPCh. 16 - Prob. 29DQPCh. 16 - Prob. 30DQPCh. 16 - Prob. 31DQPCh. 16 - Prob. 32DQPCh. 16 - Prob. 33DQPCh. 16 - Prob. 34DQPCh. 16 - Prob. 35DQPCh. 16 - Prob. 36DQPCh. 16 - Prob. 38DQPCh. 16 - Prob. 39ICA
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- CredPoint SAOG Company is unhappy with the audit report and threatens to change auditors next year. CredPoint SAOG is the biggest client of the auditor. The auditor’s independence may be compromised, as CredPoint SAOG is their biggest client and they do not want to lose such a client. Therefore, the auditor may issue a audit report that is favourable to CredPoint SAOG. Which threat may occur when a professional accountant may be deterred from acting objectively by threats, actual or perceived? a-Intimidation threats b-Self-interest threats c-Self-review threats d-Advocacy threatsarrow_forwardDuring a consulting engagement involving the development of a new accounts payable system, an internal auditor identified a control weakness. Although the weakness was reported to the manager of the systems development project, the manager decided to accept the risk because, in the manager's opinion, the risk was not significant. Six months after the implementation of the new system, the disbursements process was audited by another internal auditor who determined that the control weakness had impacted payment processing. The auditor reviewing the disbursements process should do which of the following? a. Request that the manager of the systems development project fix the system b. Report the control weakness to management and the audit committee c. Discuss the control weakness with the manager of the accounting system, but do not report the finding d. Disregard the control weakness because management previously decided to accept the risk e. None of the choicesarrow_forwardAssume Ethan sets a meeting with Vick in two days to follow-up on his request. Vick has decided not to be part of the cover-up. Use the GVV framework to help Vick prepare for the meeting. Consider the following: What should Vick say to counteract Ethan's request? How might Vick's intended action affect the company and the external auditors? Who can Vick go to for support?arrow_forward
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