Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 5, Problem 18DQP
To determine
Explain whether the auditor’s behavior will be considered as “non-negligence, ordinary negligence, gross negligence, constructive fraud, fraud, or criminal behavior”, for each of the situations given
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Assume that you are an audit senior in charge of planning the audit of an entity that your firm has audited for the previous four years. During the audit planning meeting with the manager and partner in charge of the engagement, the partner noted that the entity recently adopted an IT-based accounting system to replace its manual system. The manager and partner have limited experience with IT-based accounting systems and are relying on you to help them understand the audit implications of the entity's change. Consequently, they have askd you to respond to a few concerns regarding automated accounting systems.
Required:
a. In previous years, the audit firm has relied heavily on substantive procedures as a source of audit evidence for this entity. Given that the entity now has changed its accounting system, what are some of the factors that should consider when deciding whether to move to a reliance strategy?
b. Under what conditions should the audit firm consider engaging an IT…
Assume that you are an audit senior in charge of planning the audit of an entity that your firm has audited for the previous four years. During the audit planning meeting with the manager and partner in charge of the engagement, the partner noted that the entity recently adopted an IT-based accounting system to replace its manual system. The manager and partner have limited experience with IT-based accounting systems and are relying on you to help them understand the audit implications of the entity's change. Consequently, they have askd you to respond to a few concerns regarding automated accounting systems.
a. In previous years, the audit firm has relied heavily on substantive procedures as a source of audit evidence for this entity. Given that the entity now has changed its accounting system, what are some of the factors that should consider when deciding whether to move to a reliance strategy?
b. Under what conditions should the audit firm consider engaging an IT specialist to…
After fieldwork audit procedures are completed, a partner of the CPA firm who has not been involved in the audit performs a second wrap-up review of the audit documentation. The second review usually focuses on:
A.Evaluation of the significant judgements made by the engagement team and the related conclusions reached in forming the overall conclusion.
B. Fraud involving the client's management and its employees
C. The materiality of the adjusting entries proposed by the audit staff
D. The communication of internal control weakness to those charged with governance
Chapter 5 Solutions
Auditing And Assurance Services
Ch. 5 - Prob. 1RQCh. 5 - Prob. 2RQCh. 5 - Prob. 3RQCh. 5 - Prob. 4RQCh. 5 - Prob. 5RQCh. 5 - Prob. 6RQCh. 5 - Prob. 7RQCh. 5 - Prob. 8RQCh. 5 - Prob. 9RQCh. 5 - Prob. 10RQ
Ch. 5 - What potential sanctions does the SEC have against...Ch. 5 - Prob. 12RQCh. 5 - Prob. 13RQCh. 5 - Prob. 14.1MCQCh. 5 - Prob. 14.2MCQCh. 5 - Prob. 14.3MCQCh. 5 - Prob. 15.1MCQCh. 5 - Prob. 15.2MCQCh. 5 - Prob. 15.3MCQCh. 5 - Prob. 16.1MCQCh. 5 - Prob. 16.2MCQCh. 5 - Prob. 16.3MCQCh. 5 - Prob. 17DQPCh. 5 - Prob. 18DQPCh. 5 - Prob. 19DQPCh. 5 - Prob. 20DQPCh. 5 - Prob. 21DQPCh. 5 - Prob. 22DQPCh. 5 - Prob. 23DQPCh. 5 - Prob. 24DQPCh. 5 - Prob. 27DQPCh. 5 - Prob. 28C
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- You are the training manager at Guava & Co., Chartered Accountants. Some trainees in the firm have requested you to clarify the following issues: a) Can the auditor discard any audit document, forming part of his opinion, after the issuance of the auditor’s report? b) The changes that can be incorporated during the final the assembly process citing three such examples. c) The circumstances under which it becomes necessary to modify the existing audit documents or add new audit documents after the issuance of the auditor’s report and the matters that should be documented in such a situation. Required: Offer appropriate explanations for each of the above issues.arrow_forwardWhat are key audit matters? How do these affect the format of the audit report? b) Stewart Jones is reviewing the results of the subsequent events audit procedures. Stewart iswriting a report for his audit partner based on these results and will be attending a meetingtomorrow with the partner and representatives of the company to discuss them. The issue will bewhether the financial report should be amended, or additional notes included for thesesubsequent events.Many of the items are not material and Stewart will recommend that no action be taken withrespect to these. However, there are several items that Stewart believes are material and shouldbe discussed at the meeting. These are as follows.(a) The board is planning to issue shares in a private placement on 15 August. (b) The share issue is to fund the purchase of a 60 per cent stake in another company. Thenegotiations are in the final stages and although the contract is not yet signed it will be signedby 15 August. (c) A writ was…arrow_forwardc) You are the partner responsible for quality control in Suta Excellence, A well-known audit firm. You are reviewing the findings from a recent post-issuance (cold) review performed by your firm’s compliance department. The following were identified on a number of audits: Zhetta CompanyA review of working papers found that some working papers had not been signed off by the team member that had completed the work. Some working papers were not dated, and some did not have a signature confirming they had not been reviewed. Petra CompanyA mandatory procedure included in the audit plan which required a written representation letter to be obtained, had not been completed. A comment had been added by the audit manager stating that there were no issues requiring a written representation from management. Jantra CompanyAn audit test over purchases required a sample of 60 invoices to be tested. 54 had been tested and found to be recorded accurately and completely. Six (6) invoices could not be…arrow_forward
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