Auditing Questions

In: English and Literature

Submitted By KadenKitsune
Words 365
Pages 2
11 ANALYTICAL PROCEDURES—RATIO ANALYSIS FORM The auditor can use this form to document the performance and evaluation of ratio analysis in connection with analytical procedures performed in an audit. The form is only a guide and is not a substitute for professional judgment. The form may be modified by adding or omitting certain ratio analysis. CLIENT NAME: | | DATE OF FINANCIAL STATEMENTS: | | LIQUIDITY RATIOS 20__ | 20__ | 19__ | 19__ | 1. Current ratio = | | | | | Current Assets | | | | | Current Liabilities | _____ | _____ | _____ | _____ | Comments: | | | 20__ | 20__ | 19__ | 19__ | 2. Quick or acid test ratio = | | | | | Current Assets - Inventory | | | | | Current Liabilities | _____ | _____ | _____ | _____ | Comments: | | | PROFITABILITY RATIOS 20__ | 20__ | 19__ | 19__ | 1. Gross profit ratio = | | | | | Net Sales - Cost of Goods Sold | | | | | Net Sales | _____ | _____ | _____ | _____ | Comments: | | | 20__ | 20__ | 19__ | 19__ | 2. Operating margin ratio = | | | | | Income before Income Taxes and Interest | | | | | Net Sales | _____ | _____ | _____ | _____ | Comments: | | | 20__ | 20__ | 19__ | 19__ | 3. Net income ratio (or profit margin ratio) = | | | | | Net Income | | | | | Net Sales | _____ | _____ | _____ | _____ | Comments: | | | 20__ | 20__ | 19__ | 19__ | 4. Return on total assets ratio = | | | | | Net Income + Interest Expense | | | | | Total Assets | _____ | _____ | _____ | _____ | Comments: | | | 20__ | 20__ | 19__ | 19__ | 5.…...

Similar Documents

Auditing

...March 2012 This Auditing and Assurance Bulletin has been prepared by Auditing and Assurance staff. It has not been issued under the authority of the Auditing and Assurance Standards Board (AASB). This Auditing and Assurance Bulletin is intended to help raise practitioners’ awareness in a timely manner of significant new or emerging issues or other noteworthy circumstances related to engagements addressed by the AASB pronouncements. It is also meant to direct practitioners to relevant requirements, application and other explanatory material in the CICA Handbook – Assurance. auditing and assurance FOR PUBLIC ACCOUNTANTS PERFORMING AUDIT AND REVIEW ENGAGEMENTS BULLETIN Staff contact Chi Ho Ng, CA, CPA(IL), MBA Principal Auditing and Assurance Standards Department 277 Wellington Street West Toronto, ON M5V 3H2 Tel: (416) 204-3443 E-mail: chiho.ng@cica.ca Fax : (416) 204-3408 Auditing Considerations in an Uncertain Economic Environment Uncertainties in the current economic environment There is a possibility that the Canadian economy may weaken in the near term. This has been noted in various sources, including the economic forecast for Canada issued by the Organization for Economic Co-operation and Development. Heightened risks from renewed financial-market turmoil linked to the European sovereign debt crisis and high levels of household indebtedness are eroding consumer confidence. In January 2009, staff of the Auditing and Assurance Standards Board (AASB)......

Words: 7297 - Pages: 30

Questions to Ask in Interviews for Auditing

...This article shares questions appropriate for every type of interviewer. The Recruiter: The 'Big Picture' Person It's the recruiter's job to identify strong candidates and guide them through the hiring process. Think of the recruiter as the "big picture" person. They can give you an overview of the company and the department as a whole. (Save very specific questions about the job for the hiring manager.) The recruiter is also the best person to answer questions about the hiring process. Some questions to ask the recruiter: * How would you describe the company culture? * What type of employees tend to excel at this company? * Can you tell me more about the interview process? The Hiring Manager: Your Future Boss The hiring manager will likely supervise you if you get the job. They're the most knowledgeable people about the position and its requirements. You should direct specific questions about the job, its responsibilities and its challenges to them. You may also want to ask what kind of candidate they're seeking. Some questions to ask the hiring manager: *What are the most important skills for the job? * How would you describe your ideal candidate? * What's a common career path at the company for someone in this role? The Executive: The Industry Expert Senior managers and executives are likely to be most knowledgeable about the latest happenings in their industry. If you'll be working closely with an executive, you can ask them some......

Words: 409 - Pages: 2

Auditing

...Government regulated monopoly GAAP General Standards 1. Adequate training and proficiency 2. Independence in mental attitude 3. Due professional care Standards of Field Work Proper Planning and supervision Understanding of the entity Sufficient appropriate evidence Standards of Reporting Statements prepared in accordance with GAAP Circumstances when GAAP not consistently followed Adequacy of disclosures Expression of opinion on financial statements *Test* Table 5.1 Definitions And broad broad stuff Can accept a gift from a client as long as its no more than “token” or the amount the firm gives you You can indirectly own stock in an auditing client if its immaterial to your net worth You cannot be paid in stock Because we don’t see the audit as one event, its not a series of events even though that looks like it. Because once you have the client you usually have it for a good amount of time. “The professional engagement period begins when the registered public accounting firm either signs an initial engagement letter (or other agreement to review or audit a client’s financial statements) or begins audit, review, or attest procedures whichever is earlier: and (B) the professional engagement period ends when the audit client or the registered public accounting firm notifies the commission that the client is no longer that firm’s audit client. You might be able to write a contract that can say the audit engagement is only a year and you might......

Words: 1134 - Pages: 5

Auditing

...Chapter 1 The Demand for Audit and Other Assurance Services ← Review Questions 1-1 The relationship among audit services, attestation services, and assurance services is reflected in Figure 1-3 on page 12 of the text. An assurance service is an independent professional service to improve the quality of information for decision makers. An attestation service is a form of assurance service in which the CPA firm issues a report about the reliability of an assertion that is the responsibility of another party. Audit services are a form of attestation service in which the auditor expresses a written conclusion about the degree of correspondence between information and established criteria. The most common form of audit service is an audit of historical financial statements, in which the auditor expresses a conclusion as to whether the financial statements are presented in accordance with an applicable financial reporting framework such as U.S. GAAP or IFRS. An example of an attestation service is a report on the effectiveness of an entity’s internal control over financial reporting. There are many possible forms of assurance services, including services related to business performance measurement, health care performance, and information system reliability. 1-2 An independent audit is a means of satisfying the need for reliable information on the part of decision makers. Factors of a complex society which contribute to this need are: 1. Remoteness of......

Words: 3669 - Pages: 15

Auditing

...associated with professionally standard auditing (Olagunju, 2011, pp.85). In other to maintain the utmost standard for the accounting profession, independence is seen as being free from control or pressure and not allowing situations which would tend to weaken objectivity or create personal preconceived notions (Porter and Simon et al., 1996). Audit improves the trustworthiness of the financial statements giving it sensible assertion from an independent source that the financial statements is true and fair in agreement with accounting standards (Olagunju, 2011, pp.85-86). The next section of this essay provides detailed information on how value is added to the financial statement when the auditors’ audit with independence whilst appraising how the accounting profession has or is reacting to auditor independence. While the last section will evaluate the risks or threats to independence and explain ways of mitigating identified risks. Value of Independent Auditing on Financial Statements The significance of audit services will be impaired when independence is absent (Sweeney, 1992); therefore, an uncompromised independence gives a better quality audit to the financial statements (Baber et al., 1995). In addition, if an auditor is independent, the motivation to do a better audit is not undermined as the auditor will report misstatements (Pike, 2003). Stewart (1994) in Porter and Simon et al., (1996), likened independence to the “corner stone of auditing”. This means if the......

Words: 2487 - Pages: 10

Auditing

...MIT765801 AUDITING Individual Assignment HIH Insurance Report Student Name: Jinyun Wang Student ID: MIT122634 Lecturer Name: Susan Currie Tutor Name: Susan Currie Due Date: 29 / 1 / 2014 Submitted date: 7/ 2/ 2014 by email Executive Summary The auditing profession plays a significant role in industrialized economies for many years. In the insurance industry, the manner of auditing profession is regulated. The collapse of Health International Holdings (HIH) was recorded as the biggest corporate collapse in the history of Australia. Also an investigation of Royal Commission was warranted by the HIH collapse. Two questions considered in the failures of HIH Insurance: Did the auditors implement their responsibilities and roles? Did the auditors fulfil their auditing work ethically? This report provides an analysis of auditing issues arising from the collapse of HIH Insurance. Among factors that have gave rise to the corporate failure of HIH Insurance, that of the ethics of auditing profession, roles of auditors and effectiveness of audit committee have regarded as particular significance. Contents Executive Summary 2 1. Introduction 4 2. Discussion 5 2.1 Audit Independence 5 2.2 Audit Committee 7 2.3 Ethical Considerations 8 3. Conclusion 10 Reference List 11 1. Introduction HIH Insurance was established when MW Payne Liability Agencies Pty Ltd was incorporated by Michael Payne and Ray Williams joining together to do business of insurance......

Words: 2136 - Pages: 9

Question 9-37 Advanced Auditing

...Solution to question 9-37 i) The risks associated with the current method of accounting at Frankincents are as follows: The owner Gaboria Frank relies solely on Norma a part time bookeeper, that works two days a week with minimal or no supervision. The owner trusts the bookkeeper completely and the firm does not encourage control practices such as separate passwords and supervision Norma has developed the systems all by herself and is the only one who understands the nature of the software used. As the business owner, Gaboria should be aware of the systems put in place and should also consult his accountant before the implementations of the systems Only Norma is responsible for the complete accounting function and its activities, such as accounts receivable, disbursements, payroll, etc. There is no segregation of duties, and even though in small firms segregation of duties is not always possible, there is no override of control by the owner, giving the incentive and the opportunity for fraud. Additionally, Norma being a part-time employee may have the incentive and pressure to manipulate and increases the risk for fraud. ii) Being a small business it is not always possible to have segregation of duties and the owner, Gaboria Frank should personally perform operational and clerical activities such as accounts receivable, cash disbursements and payroll. This will give stronger control on activities that have high inherent risk and lower the opportunity and risk of fraud...

Words: 360 - Pages: 2

Auditing

...Kristin Bamberger Business Risk and Auditing Regis University Auditing Principles June 28, 2014 Business Risk and Auditing In the eyes of the average person auditing is a very black and white business as is all aspects of accounting. However, neither of these are as cut-and-dry as people would like to think. Auditors, as many people assume, are not always looking for fraud. Their main purpose in auditing is to ensure the financial statements comply with Generally Accepted Accounting Principles (GAAP). Auditing is as much for external users as it is for internal users. It is important for internal users because they can ensure they are complying with many of the GAAP laws. For external users auditing allows them to make educated decisions on which companies to invest in and they can see both business risk and audit risk. For any given auditing firm they will evaluate a potential client before actually committing to doing an audit. Auditors are looking at business risk and are always aware of audit risk. These two terms are glaringly different and yet go hand-in-hand for auditors. Many people think that business and audit risk are all about fraud, however, audit risk is more about legally protecting the auditing firm and the CPA’s while business risk is about protecting people that may invest or lend money to a business. Fraud is not actually a large part of auditing because auditing is looking at internal controls, and if a company has strong internal controls......

Words: 1837 - Pages: 8

Auditing

...AUDITING: A JOURNAL OF PRACTICE & THEORY Vol. 24, No. 1 May 2005 pp. 21ñ35 Recent Changes in the Association between Bankruptcies and Prior Audit Opinions Marshall A. Geiger, K. Raghunandan, and Dasaratha V. Rama SUMMARY: The intense legislative and media scrutiny after a series of high-profile corporate failures, coupled with the paradigm shift in the regulation of the auditing profession brought forth by the Sarbanes-Oxley Act, suggests that auditorsí decisions would be more conservative in the period after December 2001. Based on analyses of 226 financially stressed companies that entered bankruptcy during the period from 2000 to 2003, we find that auditors are more likely to issue going-concern modified audit opinions in the period after December 2001. Since the post-December 2001 period coincides with recovery from a recession in the U.S., we also examine prior audit opinions for 93 companies entering bankruptcy in 1991 and 1992. We find that auditors were also more likely to issue prior going-concern modified audit opinions in 2002ñ03 than in the earlier recession recovery period. Following the technique used in Francis and Krishnan (2002), we document that the increase in going-concern modification rates for bankrupt companies after December 2001 is due to changes in auditor reporting decisions and not solely due to differences in client characteristics between the time periods studied. Keywords: bankruptcy; going-concern reports. Data Availability: Contact the......

Words: 8724 - Pages: 35

Auditing

...1­14 (Objectives 1­1, 1­3, 1­5) the following questions deal with audits by CPA firms. 14. Choose the best response. A. Which of the following best describes why an independent auditor is asked to express an opinion on the fair presentation of financial statements? 1) It is difficult to prepare financial statements that fairly present a company’s financial position, operations, and cash flows without the expertise of an independent auditor. 2) It is management’s responsibility to seek available independent aid in the appraisal of the financial information shown in its financial statements. 3) The opinion of an independent party is needed because a company may not be objective with respect to its own financial statements. 4) Itisacustomarycourtesythatallstockholdersofacompanyreceiveanindependent report on management’s stewardship of the affairs of the business. B. Independent auditing can best be described as 5) A branch of accounting. 6) Adisciplinethatatteststotheresultsofaccountingandotherfunctionaloperations and data. 7) A professional activity that measures and communicates financial and business data. 8) A regulatory function that prevents the issuance of improper financial information. C. Which of the following professional services is an attestation engagement? 9) A consulting service engagement to provide computer ­ processing advice to a client. 10) An engagement to report on......

Words: 2888 - Pages: 12

Auditing

...amongst Board members (ASA500, A8). * Conduct an internal control questionnaire to verify completeness and accuracy of sales records and correct classification of transactions (ASA 500, A14; Arens et al. 2013, p. 282, 287). * Examine the summary of significant accounting policies in the notes of financial statements for changes to accounting policies and practices (Elders 2013b, p. 4). * Re-calculate carrying amounts of livestock to check for compliance issues in inventory recognition (ASA500, A19; Binstead & Sprague 2013). EVENT 3: On 2nd August 2013, ‘Elders was compelled by its lenders to sell’ Futuris Auto to Clearlake for $69 million (Binstead 2013b). While the sale to reduce debt was expected, ‘the price raised questions’, given the book value of Futuris was above $200 million in the previous year (Binstead 2013b). Discussion: Planned asset sales to alleviate constraints on capital and credit may give rise to material misstatement (ASA 315, Appendix 2). Overstatement of the value of Futuris Auto in the previous year may indicate a risk of fraudulent financial reporting in the current period (Arens et al. 2013, p. 307). Misstatement may also occur in the classification and value of current and non-current assets in the event of forced sales (Arens et al. 2013, p. 728). Evidence: * Examine documents for: * Acquisition price of Futuris * Authorisation of the sale * Connection between authoriser and Clearlake * Terms,......

Words: 1566 - Pages: 7

Auditing

...AUDIT CRUNCH: REFORMING AUDITING 3 Fundamental Flaws in Current Audit Practice 1st point From this journal, it mainly focuses on the debating of three issues which are deeply embedded in the current auditing practices. Firstly, auditing model is one of the fundamental issues that exist in the auditing practices. It makes auditors’ financially dependent upon companies and persuades them to prioritize their own economic interest at the expense of other parties which may have an interest in audits. This is because auditors are remunerated by the client company rather than by an independent body and resulting the auditors are not able to retain sufficient distance in delivering independent audit. Auditing firms used their control of the auditing markets to colonies adjacent a market to sell consultancy services to audit clients where it causes the auditing model in practice is further complicated. With this, it will increase the auditor fee dependency upon companies and hence cause impairment in the independence of an auditor. The current auditing model is flawed and cannot be repair as auditors are generally banned from selling consultancy services to audit clients. Potential Solution The legislators should be allowed to appoint auditors of major companies. Auditors will not fear of losing the job as they don’t have to socialize their client. Although the fees could come from client but legislator or government are the one selecting auditors for work. This is to......

Words: 743 - Pages: 3

Auditing

...CHAPTER 2 OVERVIEW OF AUDITING I. Review Questions 1. One definition of auditing is that it is a systematic process by which a competent, independent person objectively obtains and evaluates evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and communicating the results to interested users. The Philippine Standards on Auditing (PSA) 120 “Framework of Philippine Standards on Auditing” states the objective of an audit as follows: “The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared in all material respects, in accordance with an identified financial reporting framework.” 2. This apparent paradox arises from the distinction between the function of auditing and the function of accounting. The accounting function is the process of recording, classifying and summarizing economic events to provide relevant information to decision makers. The rules of accounting are the criteria used by the auditor for evaluating the presentation of economic events for financial statements and he or she must therefore have an understanding of generally accepted accounting principles (GAAP), as well as generally accepted auditing standards (GAAS). The accountant need not, and frequently does not, understand what auditors do, unless he or she is involved in doing audits, or has been......

Words: 2252 - Pages: 10

Auditing

... AUDITING THEORY TESTBANKS / REVIEWERS 1. When an auditor believes that an understanding with the client has not been established, he or she should ordinarily a. Perform the audit with increase professional skepticism. b. Decline to accept or perform the audit. c. Assess control risk at the maximum level and perform a primarily substantive audit. d. Modify the scope of the audit to reflect an increased risk of material misstatement due to fraud. 2. An auditor should design the written audit program so that a. All material transactions will be selected for substantive testing. b. Substantive tests prior to the balance sheet date will be minimized. c. The audit procedures selected will achieve specific audit objectives. d. Each account balance will be tested under either tests of controls or tests of transactions. 3. Which of the following fraudulent activities most likely could be perpetrated due to the lack of effective internal controls in the revenue cycle? a. Fictitious transactions may be recorded that cause an understatement of revenues and overstatement of receivables. b. Claim received from customers for goods returned may be intentionally recorded in other customer’s accounts. c. Authorization of credit memos by personnel who receive cash may permit the misappropriation of cash. d. The failure to prepare shipping documents may cause an overstatement of inventory balances. 4. Accepting an engagement to examine an entity’s......

Words: 24671 - Pages: 99

Auditing

...Accounting Oversight Board (PCAOB) this board is responsible for establishing auditing standards for public companies, it is appointed and overseen by the SEC. The PCAOB provides oversight for auditors of public companies, establishes auditing and quality control standards for public company audits, and performs inspections of the quality controls at audit firms performing those audits. AICPA - Auditing standards. The Auditing Standards Board (ASB) is responsible for issuing pronouncements on auditing matters for all entities other than publicly traded companies i.e private companies. 2-10 Generally accepted auditing standards have been criticized by different sources for failing to provide useful guidelines for conducting an audit. The critics believe the standards should be more specific to enable practitioners to improve the quality of their performance. As the standards are now stated, some critics believe that they provide little more than an excuse to conduct inadequate audits. Evaluate this criticism of the 10 generally accepted auditing standards. * Presently there are 10 generally accepted auditing standards which were developed by the AICPA. These 10 standards are sub categorised into three main sections, General qualifiations and conduct, field work performance of the audit, Reporting results. These set of rules clearly explains the duty of auditor and what he has to take care while auditing. * The above mentioned standards are good and are very clear. ......

Words: 1589 - Pages: 7

Barely Lethal (2015) 720p WEB-DL 750MB | HD Somnium | گردشی در برگن ، دومین شهر بزرگ نروژ