The existence assertion is to make sure that the client and accounts exist, the completeness is to make sure that all of the balances are recorded, and the valuation is to make sure that the balances are recorded at the correct amount. It is important that the auditor obtains a confirmation from a third party for the information in accounts receivables. After communicating and obtaining the information, the auditor is to evaluate the information (SAS No. 67, AU Section 330.11). The audit objectives auditors use to perform year-end sales cutoff tests are to determine if the information they obtained by the confirmation reduces the audit risk level.
Assignment from the Readings Roberta Willis ACC 400 November, 2014 Kylene Smith ● Case 13-4 Application of SFAC No. 13 a. What is the theoretical basis for the accounting standard that requires certain long-term leases to be capitalized by the lessee? Do not discuss the specific criteria for classifying a specific lease as a capital lease. When there is a transfer in a lease, all benefits along with risk are transferred to the lessee and will be capitalized by the lessee as well.
Financial accounting information is used for a.|investment decisions.| b.|regulatory measures.| c.|stewardship evaluation.| d.|all of these.| ANS: D PTS: 1 DIF: Easy OBJ: 1-1 NAT: AACSB Communication 6. Which of the following is NOT part of the financial accounting information system? a.|filing reports with the SEC| b.|reporting a large contingent liability to current and potential shareholders| c.|determining the future cashflows of a proposed flexible manufacturing system| d.|preparing GAAP financial statements| ANS: C PTS: 1 DIF: Meduim OBJ: 1-1 NAT: AACSB Reflective 7. Which of the following does NOT describe cost management system? a.|evaluation of segments or products within the firm| b.|emphasis on the future| c.|externally focused| d.|focus on effective use of
ACCT 555 External Auditing Chapter 12, pages 390–397: Problems 12-17, 12-18, and 12-27 Chapter 13, pages 429–430: Problems 13-22, 13-23, and 13-24 Chapter 12, pages 390–397: Problems 12-17, 12-18, and 12-27 12-17 a. (2) technologies reduce some types of risks while introducing new types of risks to be managed. b. (1) Controls that determine whether a vendor number matches the pre-approved vendors in the vendor master file. c. (3) expand testing of automated application controls used to reduce control risk to cover greater portions of the fiscal year under audit.
When we determine the method for recognizing revenue for the Power Starterpack, we should consider which deliverable and unit of accounting. In order to identify this issue, I will discuss it from three different situations. 1. The activation card is not a separate deliverable and not a separate unit of accounting. First, according to the ASC 605-25-25-6, “a delivered item or items that do not qualify as a separate unit of accounting within the arrangement shall be determined for those combined deliverables as a single unit of accounting.” If the Power starterpack is not a separate deliverable, it shall be considered as a single unit of accounting, which is not a separate unit of accounting.
Company’s in the IPO process and newly public companies are not required to provide either a management assessment or an auditor attestation report until they file their second annual report with the SEC. While companies in the IPO process are not required to comply with these regulations, in order to prepare for these certifications and audit, it is important to establish, document, and monitor compliance of internal controls as early as possible. 2. One practice the LJB is doing right and should continue to do is the use of pre-numbered invoices. This prevents transactions from being skipped over or recorded more than once.
B. not subject to review by higher levels of management except in specific cases where the input of higher management is required. C. subject to review by higher levels of management in order to eliminate slack. D. not critical to the success of a budgeting program. 5. April Company makes collections on sales according to the following schedule: --30% in the month of sale --60% in the month following sale --8% in the second month following sale The following sales are expected: [pic] Cash collections in March are budgeted to be: A.
3. Are the main vendors' account balances verified against the vendors' balances from their own records, at least once per year? Payroll: 1. Are employee addresses and bank account numbers (for direct deposit) checked through accounting software at periodic intervals, to determine that there are no two employees with the same bank account number (which would indicate a fake employee, also called a ghost employee)? 2.
“Under the proposed model, all leases are essentially treated the same for lessees and in a manner more akin to the traditional capital/finance lease mode” (Deloitte, 2011). Lessees record a right-of-use asset and a corresponding obligation to compensation of payments. Lessors would either follow a derecognition model or a performance obligation model, depending on their level of exposure to “risks or benefits” during or after the lease term associated with the original asset. Furthermore, under U.S. GAAP, the lease term is set forth by the lessor. The lessor owns the asset, therefore he/she determines the lease term.
Target Analysis Summary We carefully reviewed Target’s 10 K report and found that Target’s auditor Ernst& Young LLP, expressed unqualified opinions on both Target’s consolidated financial statements and internal controls. Based on that, we reviewed the notes to Target’s financial statement and concluded summary in the following. According to independent auditor’s report, financial statements of Target Corporation and its subsidiaries comply with US GAAP, and Target doesn’t have significant accounting policy changes for the past year. No major development beyond the end of accounting period was found in the notes. Also, based on Target’s income statements, Target doesn’t have any revenues or expenses non-recurring in nature.