This week’s homework is a mix of questions from the book and an essay question. Work is to be prepared in APA format and all content must be your own. Any sources used must be referenced and cited per APA requirements (this includes using quotation marks for direct quotes).
- Compare and contrast traditional auditors’ legal responsibilities to clients and third-party users under common low. How has that law changed in recent years?
- Is the auditor’s liability affected if the third party was unknown rather than known? Explain
- What is the auditor’s responsibility for obtaining an understanding of internal control? How does that responsibility differ for audits of public and nonpublic companies?
- State the six transaction-related audit objectives.
- Explain the importance of proper credit approval for sales. What effect do adequate controls in the credit function have on the auditor’s evidence accumulation?
- Distinguish between the sales journal and the accounts receivable master file. What type of information is recorded in each and how do these accounting records relate?
- State what is meant by a representative sample and explain its importance in sampling audit populations.
- Explain the major difference between statistical and nonstatistical sampling. What are the three main parts of statistical and nonstatistical methods?
- Suppose that the accounting manager of a firm you are auditing is suspected of manipulating sales and collection transactions to make earnings and receivable payments look higher than they are. What kinds of evidence will your audit look for? Suppose that this accounting manager wanted sales to appear lower in order to reduce tax expenses. What kinds of evidence will your audit look for in this case?
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