Comptronix Case B. The most valuable ratio that could have been used by the auditor to detect fraud would have been the inventory turnover ratio. This ratio shows the sales in comparison to the total inventory on hand. They would have been able to see the significant decline in this ratio and been able to suspect that there was an error in inventory. The inventory would have been going up but the sales did not due to the factitious invoices. Another ratio that would be beneficial
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consider the integrity and attitude of management‚ influential personalities likely to have vested interest‚ management experience and knowledge of the finance team‚ and the level of pressure management is under to perform. During the audits of Comptronix the factors that I think were present to indicate a high inherent audit risk is mainly the influence of the three leaders with a significant vested interest. Not only did they have a significant amount of stock in the company they were also the
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Case 4.2 Comptronix Corporation identifying inherent risk and control risk factors Mark S. Beasley Frank A. Buckless Steven M. Glover Douglas F. Prawitt it was 9:30 A.M. on a monday morning when the call came through. "hi dr mitchell‚ do you have a minute? "sure" the professor replied "i am on of your former students‚ but if you don ’t mind‚ i would prefer to remain anymous. i think it is best for both us if i not reveal my name or my company to you. i am concerned that the
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A439: Advanced Auditing Accounting and Review Services Take Home Quiz February 6‚ 2008 Instructions: 1. On the Scantrom form in box labeled “Test No.” print “Review Services.” 2. Use the Scantron form to indicate your answers to the questions below. 3. Turn-in the Scantron sheet on the due date. 4. Open book‚ open note‚ online searches are all allowed. 5. NOT allowed – using other students‚ people or CPA exam review books. Suggestion: If you plan to take the Auditing portion of the CPA
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components of the audit risk model is inherent risk. Describe typical factors that auditors evaluate when assessing inherent risk. With the benefit of hindsight‚ what inherent risk factors were present during the audits of the 1989 through 1992 Comptronix financial statements? Inherent risk is a measure of the auditor’s assessment of the susceptibility of an assertion to a material misstatement assuming there are no related internal
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too much or fear they will lose clients by being tougher." Growing Problem The problem is growing fast. On Friday‚ Comptronix Corp.‚ for example‚ disclosed that inventory manipulations played a significant role in the scandal at the once-highflying Alabama electronics company. In November‚ William Hebding‚ its chairman and chief executive‚ told the Comptronix board that he and two other top officers had simply‚ though improperly‚ inflated profits by putting on the books as capital
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shown above. You should identify at least three additional risks beyond those listed above. Case 4.6 Phar-Mor‚ Inc. Case 4.6 Phar-Mor‚ Inc. 6. A) Other high profile cases where a company has committed fraud by misstating inventory include Comptronix Corporation and Bristol-Meyers Squibb Company. B) It is particularly difficult to detect intentional misstatements of inventory because manual checks of inventory only occur semi-annually‚
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|Case 4.6 | |Instructional Notes | | | |Phar-Mor‚ Inc.:
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