statements. To revisit the concepts of tolerable misstatement‚ materiality‚ and audit sampling. [4] [5] [6] This case is designed to help students decompartmentalize their sampling knowledge from their general business and audit knowledge. To illustrate differences in “hard” versus “soft” (e.g.‚ estimates based on judgment) adjustments. To illustrate the importance of projected misstatement and sampling risk in the evaluation of misstatements detected in sampling applications. KEY FACTS
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1) Explain the auditor’s responsibility to detect material misstatements due to errors and fraud and the categories of fraud affecting financial reporting. Identify misstatement in financial report is the major task of auditor. Regardless the result of error or fraud‚ plan and perform audit engagements are being required by auditors to ensure financial statements are free from material misstatement by reasonable assurance instead of total responsibilities to the fair and true reports due to the limitation
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Course Project This paper analyzes a fictional privately held company‚ Smackey Dog Foods‚ Inc. as well as its fictional auditor‚ Keller CPAs. The analysis is based on a Keller Graduate School of Management scenario and a series of questions developed to address concepts learned throughout the External Auditing course. Concepts include: SEC influence‚ audit planning‚ audit stages‚ internal controls‚ confirmations‚ sample size‚ obtaining evidence‚ inventory‚ warehousing cycles‚ Professional Rules of
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Feb is deadline => now missing the deadline => management does not want any adjustment to reduce shareholder and creditor’s confidence Materiality: 1. 625000 = 5% of earnings before taxes 2. performance materiality = 75% * 625000 = 468750 Misstatements (SUDS) 1. warranty expense‚ repair and maintenance expense‚ litigation expense and A/R 2. non-sampling procedures: warranty expense‚ repair and maintenance expense‚ litigation expense 3. sampled A/R Warranty expense Underestimate by 130000 (verbal
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income statement information to prepare a common-size income statement for all three years. Use the information to identify accounts for which you believe there is a concern about material misstatements. Use a format similar to the following: Estimate of $ Amount Account Balance of Potential Misstatement e. Use the three divisional income statements in the Pinnacle-Financials Excel file on the Web site to prepare a common-size income statement for each of the three divisions for all three
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Accounting Standards Committee (IASC) have contributed to clarify the materiality concept. FASB Concepts Statement No. 2‚ Qualitative Characteristics of Accounting Information (1980) defines materiality as follows: “The magnitude of an omission or misstatement of accounting information that‚ in the light of surrounding circumstances‚ makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission
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prevention and detection of fraud rests with both those charged with governance of the entity and with management. ISA/HKSA 240 (Clarified) also provides expanded operational guidance for auditors to consider the existence of material misstatement due to fraud in a financial statement audit. It emphasizes the auditor’s increased responsibility for detecting fraud‚ and the auditor is now required to be more proactive in searching for fraud during the whole audit process under
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be one specific objective for each general objective. 4. A An auditor uses monetary unit sampling with a sampling interval of $20‚000 and detects an item with a recorded amount of $10‚000 with an audited value of $4‚000. The projected misstatement of the sample is: A) $12‚000. B) $6‚000. C) $10‚000. D) $3‚000. 5. A The primary difference between an audit of the balance sheet and an audit of the income statement is that the audit of the income statement deals with the verification
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1- public accounting firm is a firm that registered by the public accounting oversight board so it provides accounting service to public company. Sarbanes-Oxley Act of 2002 contains provision preventing any company which is not registered with the board from‚ furnishing‚ participating in an audit of a public company or preparing. the different categories of public accounting firm are as follow : (Local Regional National Big 4 Alternative Practice Structures) Also there are different
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Syllabus and Course Outline BA 595.01w and .02w Applied Business Research Spring 2015 Professor: Office: Office Phone: E-Mail: Office Hours: Steven S. Shwiff‚ Ph.D.‚CPF BA 102b (903) 886.5679 Steven.Shwiff@tamuc.edu online by arrangement and before Webinars COURSE DESCRIPTION: A course to investigate the techniques of the research process as applied to business and economics. Experience is gained in defining research problems‚ designing a research project‚ and in collecting‚ analyzing‚ recording
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