DEVRY ACCT 555 Entire Course

lower cost. He presents the new check and indicated amount on the check to the
cashier, and saves the excess cash for himself. Question: Formulate three internal
control features that the restaurant could implement, to eliminate this defalcation
7. Three types of legal documents and records that auditors examine in the
planning phase of an audit are the corporate charter and bylaws, corporate minutes
of meetings of the board of directors and stockholders, and contracts. Discuss the
audit-relevant information contained in each of these three types of documents that
an auditor should be aware of early in the audit.
8. (TCO F) What are specific audit objectives? Explain their relationship to the
general audit objectives. (Points: 25)
2.(TCO H) Explain why it is necessary to allocate the preliminary judgment about
materiality to individual accounts (segments) in the financial statements. Also
explain why allocating to balance sheet accounts is more common than allocating to
income statement accounts. (Points: 25)
Allocating the preliminary judgment about materiality to individual segments is
necessary because evidence is accumulated for segments rather than for the
financial statements as a whole. Allocating to segments establishes a tolerable
misstatement amount for each segment, which helps the auditor decide the
appropriate audit evidence to accumulate for each segment. Most practitioners
allocate materiality to balance sheet accounts rather than income statement
accounts because there are fewer balance sheet than income statement accounts
3. (TCO I) For each of the following potential misstatements, provide one potential
audit test that could be used to detect the misstatement
4. (TCO I) Describe how the auditor tests the classification objective for accounts
receivable. (Points: 25)
The classification objective is tested by reviewing the aged trial balance for material
receivables from affiliates, officers, directors, or other related parties. If notes
receivable or accounts that should not be classified as a current asset are included
with the regular accounts, these should also be segregated. Finally, if credit balances
in accounts receivable are significant, it is appropriate to reclassify them as accounts
payable
5. The design of tests of details of balances for inventory is affected by audit
results from multiple cycles. Identify the cycles, other than the inventory and
warehousing cycle, that affect the audit of inventory
6. Describe three computer auditing techniques available to the auditor