ns. During this year's annual financial audit, the external auditors noticed unusually large gaps in dates of the captured transactions being copied to the audit files. Baker Manufacturing management informed the auditors that the incre
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Risk Identification and Plan of Action Baker Manufacturing uses EAMs in several of its financial systems to capture material transactions. During this year's annual financial audit, the external auditors noticed unusually large gaps in dates of the captured transactions being copied to the audit files. Baker Manufacturing management informed the auditors that the increased transaction processing times caused by the EAMs had forced computer operators to turn off the EAMs to allow the processing of important transactions in a timely fashion. In addition, much maintenance had been performed on key applications during the past year. Required: Outline any potential risks and determine the courses of action the external auditors should follow.
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- Audit PlanThe auditors for Golden Gate Company have a gut feeling that liabilities may be unrecorded. Their initial suspicions stem from a radical decline in accrued liabilities from last year. Golden Gate’s records are all computerized.Required:Devise a plan to search the data files to perform a substantive test for identifying unrecorded liabilitiesRisk Identification and Plan of Action The internal auditors of Brown Electrical Company report to the controller. Due to changes made in the past year to several of the transaction processing programs, the internal auditors created a new test data set. The external auditors requested that the old data set also be run. The internal auditors embarrassingly explained that they overwrote the original test data set. Required: Outline any potential exposures and determine the courses of action the external auditor should take.The internal auditors of Tantacle Electrical Company report to the controller. Because ofchanges made in the past year to several of the transaction processing programs, the internalauditors created a new test data set. The external auditors requested that the old date set alsobe run. The internal auditors, embarrassed, explained that they overwrote the original testdata set.Required:Outline any potential risks and determine the courses of action the external auditor shouldtake.
- The auditors for Golden Gate Company have a gut feeling that liabilities may be unrecorded. Their initial suspicions stem from a radical decline in accrued liabilities from last year. Golden Gate’s records are all computerized. Required Devise a plan to search the data files to perform a substantive test for identifying unrecorded liabilities.The internal auditors of Tantacle Electrical Company report to the controller. Because of changes made in the past year to several of the transaction processing programs, the internal auditors created a new test data set. The external auditors requested that the old date set also be run. The internal auditors, embarrassed, explained that they overwrote the original test data set.Outline any potential risks and determine the courses of action the external auditor should take.The internal auditors of Brown Electrical Company report to the controller. Because of changes made in the past year to several of the transaction processing programs, the internal auditors created a new test data set. The external auditors requested that the old data set also be run. The internal auditors, embarrassed, explained that they overwrote the original test data set. Required: Outline any potential risks, and determine the courses of action the external auditor should take.
- During 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 choicesThe internal auditors of Brown Electrical Company report to the controller. Due to changes made in the past year to several of the transaction processing programs, the internal auditors created a new test data set. The external auditors requested that the old data set also be run. The internal auditors embarrassingly explained that they overwrote the original test data set. Required: Outline any potential exposures and deter- mine the courses of action the external audi- tor should take.An assistant on the Carter Company audit has been working in the revenue cycle and has compiled a list of possible errors and fraud that may result in the misstatement of Carter Company’s financial statements and a corresponding list of controls that, if properly designed and implemented, could assist in preventing or detecting the errors and fraud. For each possible error and fraud numbered a through o, select one internal control from the following answer list that, if properly designed and implemented, most likely could assist management in preventing or detecting the errors and fraud. Each response in the list of controls may be selected once, more than once, or not at all. A. Shipping clerks compare goods received from the warehouse with the details on the shipping documents. B. Approved sales orders are required for goods to be released from the warehouse. C. Monthly statements are mailed to all customers with outstanding balances. D. Shipping clerks compare…
- Identify Computer Control Weaknesses. Ajax Inc., an audit client, recently installed anew accounting information system to process its shipping, billing, and accounts receivable records more efficiently. During interim work, an assistant completed the review of theaccounting information system and the internal controls. The assistant determined the following information concerning the new accounting information system and the processingand control of shipping notices and customer invoices.Each major computerized function (i.e., shipping, billing, accounts receivable) is permanently assigned to a specific computer operator who is responsible for making program changes,running the program, and reconciling the computer log. Responsibility for custody and controlover the various databases and system documentation is randomly rotated among the computer operators on a monthly basis to prevent any one person from access to the database anddocumentation. Each computer programmer and computer…You are an auditor working with JUMAN audit firm. JUMAN audit firm accepted two engagements to audit the financial statements of MUNER company and MUHEET company. Explain how risk of material misstatement should he assessed and what effect that assessment will have on detection risk for the following audit clients: MUHEET Corporationis one of several companies engaged in the manufacture of high- speed, high- capacity data storage devices. The industry is very competitive and subject to quick changes in technology. MUHEET’s operating results would place the company in the second quartile in terms of profitability and financial position. The company has never been the leader in the industry, with its products typically slightly behind the industry leaders in terms of performance.A division of your company purchased a large quantity of new desktop computers during the current fiscal year. An internal audit manager has asked you to audit the process used to acquire the computers. He also wants you to determine whether the computers have been used properly and accounted for correctly. The manager specified a set of audit objectives to guide your tests. For example, he wants you to determine whether: (1) The purchases of the computers were properly authorized. (2) Responsibilities regarding the computers were properly segregated. (3) The computers, as well as the software and information they contain, are properly safeguarded. Consider both physical and logical access。 (4) Laws and regulations regarding software usage have been complied with. (5) The computers recorded as being purchased actually exist. (6) All of the computers that were purchased have been recorded. (7) The amounts at which the computers are recorded are correct. (8) The estimated useful lives…