ACCT 555 DeVry Entire Course

20-17
a. A factory foreman at Steblecki Corporation discharged an hourly worker but did not notify the human resources
department. The foreman then forged the worker’s signature on time cards and work tickets and, when giving out the
checks, diverted the payroll checks drawn from the discharged worker to his own use. The most effective procedure
for preventing this activity is to
An auditor found that employee time records in one department are not properly approved by the supervisor. Which of
the following could result?
The purpose of segregating the duties of hiring personnel and distributing payroll checks is to separate the
20-20
· Identify whether each of the procedures is primarily a test of control or a substantive test of transactions.
· Identify the transaction-related audit objective(s) of each of the procedures.
21-17
Which of the following controls will most likely justify a reduced assessed level of control risk for the occurrence
assertion for purchases of inventory?
21-18
When an auditor tests a client’s cost accounting records, the auditor’s tests are primarily designed to determine that
21-19
Which of the following procedures is the auditor least likely to perform on the actual date the physical inventory count
is observed?
21-20
For each of the preceding questions, state the purpose of the internal control.
For each internal control, list a test of control to test its effectiveness.
For each of the preceding questions, identify the nature of the potential financial misstatement(s) if the control is not in
effect.
For each of the potential misstatements in part c, list a substantive audit procedure to determine whether a material
misstatement exists
ACCT 555 DeVry Week 7 Course Project
Smackey Dog Foods Inc.
Smackey Dog Foods Inc.—Scenario Summary Smackey Dog Foods Inc. started in the kitchen of Sarah, Kim, and
Jillian’s family home in the suburbs of Chicago. The three sisters initially bought the ingredients for their natural dog
food recipes from the local grocery store. They used their dogs and the neighborhood dogs as their taste testers. Their
dog food products were so good, the local kennels and veterinary offices were glad to distribute the sisters' products
to their customers.
Local demand increased significantly. Local pet stores and small grocery stores discovered the products and became
distributors. The sisters moved the expanding business into a larger facility and hired a few more workers. Although
their competitors’ sales were flat or declining, Smackey Dog Food Inc.’s sales were on a vertical climb!
Sales were so good last year that the sisters opened a boutique division named Best Boy Gourmet, specializing in
freshly manufactured, one-serving packages meant for consumption no later than 3 days after production. They sell
this product at three times the cost of their other products and by special order only through their new website. Demand
is high, but waste has been an issue.
Sarah is the president and general manager of the operation. Sarah has been very proactive in growing the business.
She has met with her banker to discuss expanding the facilities and equipment with another $150,000 loan. Their first
loan for $150,000 was secured by the industrial-size food production equipment purchased with the loan. The banker
now demands an audit of the corporate financial statements before releasing another loan to the company. Sarah has