ACCT 444 Week 2 Homework

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1. Material misstatements were included in a filed document. 2. A monetary loss occurred. 3. Lack of due diligence by the CPA. 4. Privity with the CPA. 5. Reliance on the financial statements. 6. The CPA had scienter (knowledge and intent to deceive). Required For each of the items 1 through 6 listed above, indicate whether the statement must be proven under 1. Section 11 of the Securities Act of 1933 only. 1. Section 10(b) of the Securities Exchange Act of 1934 only. 1934. Both Section 11 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934. 1934. Neither Section 11 of the Securities Act of 1933 nor Section 10(b) of the Securities Exchange Act of 1934.* Chapter 6 6-23 (Objectives 6-1, 6-3) Auditors provide “reasonable assurance” that the financial statements are “fairly stated, in all material respects.” Questions are often raised as to the responsibility of the auditor to detect material misstatements, including misappropriation of assets and fraudulent financial reporting. Required . 1. Discuss the concept of “reasonable assurance” and the degree of confidence that financial statement users should have in the financial statements. 1. What are the responsibilities of the independent auditor in the audit of financial statements? Discuss fully, but in this part do not include fraud in the discussion. 1. What are the responsibilities of the independent auditor for the detection of fraud involving misappropriation of assets and fraudulent financial reporting? Discuss fully, including your assessment of whether the auditor’s responsibility for the detection of fraud is appropriate.
. 6-27 (Objectives 6-6, 6-7) The following are specific transaction-related audit objectives applied to the audit of cash disbursement transactions (a through f), management assertions about classes of transactions (1 through 5), and general transaction-related audit objectives (6 through 11). Specific Transaction-Related Audit Objective 1. Recorded cash disbursement transactions are for the amount of goods or services received and are correctly recorded. 2. Cash disbursement transactions are properly included in the accounts payable master file and are correctly summarized. 3. Recorded cash disbursements are for goods and services actually received. 4. Cash disbursement transactions are properly classified. 5. Existing cash disbursement transactions are recorded. 6. Cash disbursement transactions are recorded on the correct dates. Required 1. Explain the differences among management assertions about classes of transactions and events, general transaction-related audit objectives, and specific transaction-related audit objectives and their relationships to each other. 1. For each specific transaction-related audit objective, identify the appropriate management assertion. 2. For each specific transaction-related audit objective, identify the appropriate general transaction-related audit objective. Chapter 11 11-30 (Objective 11-1) The following are activities that occurred at Franklin Manufacturing, a nonpublic company. 1. Franklin’s accountant did not record checks written in the last few days of the year until the next accounting period to avoid a negative cash balance in the financial statements. 2. Franklin’s controller prepared and mailed a check to a vendor for a carload of material that was not received. The vendor’s chief accountant, who is a friend of Franklin’s controller, mailed a vendor’s invoice to Franklin, and the controller prepared a receiving report. The vendor’s chief accountant deposited the check in an account he had set up with a name almost identical to the vendor’s.
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ACCT 444 Week 2 Homework

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