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ACCT 444 DeVry Week 8 Final Exam


Examine sales returns for approval by an authorized official. Review the prelisting in the cash receipts book to determine whether cash is prelisted daily. Reconcile the recorded cash receipts on the prelisting with the cash receipts journal and the bank statement for a one month period. Account for a sequence of shipping documents, and examine each one to make sure that a duplicate sales invoice is attached. Question 16.16. (TCO 6) If planned detection risk is reduced, the amount of evidence the auditor accumulates will (Points : 5) increase. decrease. remain unchanged. be indeterminate. Question 17.17. (TCO 6) Which of the following statements is correct regarding the costs involved in obtaining evidence? (Points : 5) Cost of obtaining evidence is a valid reason for excluding that evidence from the audit. Physical examination is the most expensive type of audit evidence. The least expensive type of evidence is analytical procedures. Each of the above is correct Question 18.18. (TCO 9) The tolerable exception rate (TER) has a significant effect on sample size. The relationship of TER to sample size is (Points : 5) direct (larger TER = larger sample). inverse (larger TER = smaller sample). variable (sometimes larger, sometimes smaller). not determinable. Page 2 Question 1. 1. (TCO 2) An entity has changed its depreciation method for production equipment from a straight line method to units of production method based on hours of utilization. The entity’s auditor concurs with the change although it has a material effect on the comparability of the entity’s financial statements. From the following opinion types, select and write the opinion type or types that can be used by the auditor. Up to two opinion types can be selected. In addition, select and write the appropriate report modification options that are required to be made by the auditor. You can select as many options as apply. (Becker, Adopted) Opinion Options Unmodified Except for qualified Adverse Disclaimer

Report Modification Options Issue the independent auditor’s report without modification Modify the introductory paragraph Modify the auditor’s responsibility paragraph Omit the auditor’s responsibility paragraph Modify the opinion paragraph Add an emphasis-of-matter paragraph preceding the opinion paragraph Add an emphasis-of-matter paragraph following the opinion paragraph (Points : 35) Question 2. 2. (TCO 4) Distinguish between ordinary and gross negligence. (Points : 25) Question 3. 3. (TCO 2) Discuss each of the three broad categories (types) of operational audits. (Points : 30) Question 4. 4. (TCO 3) Fraud was extensively discussed in this class. There are three conditions that must be present for management fraud to exist. First, identify each of these three conditions. Then, for each condition, identify two risk factors related to the risk of fraudulent financial reporting. (Points : 30) Question 5. 5. (TCO 7) Discuss how each of the following influences the persuasiveness of evidence. 1. Relevance 2. Independence of provider 3. Effectiveness of client’s internal controls 4. Auditor’s direct knowledge 5. Degree of objectivity (Points : 30) Question 6. 6. (TCO 3) Melissa Barry, CPA, is the auditor of Audio Video, Inc. Audio Video has not paid Melissa's audit fee for the past 2 years. Melissa is working on this year's audit of Audio Video. Determine whether Rule 101 of the AICPA's Code of Professional Conduct, has been violated. Briefly explain why the situation violates or does not violate the code. (Points : 30) Question 7. 7. (TCO 3) Assess the impact Enron has had on the auditing and accounting profession. Evaluate the industry's response to date. Were the changes implemented enough to restore investor confidence and the public's opinion of the auditing and accounting profession? (Points : 30)

Guide to Public Company Auditing
The New Assurance Handbook -
Summary Financial Information from the Auditor for Fiscal Year 2011
Implementation Guide on Reporting Standards -
Audit Exemption for Small Companies - Accounting and - ACRA
DEVRY ACCT 346 Week 8 Final Exam
DEVRY ACCT 346 Week 8 Final Exam