Chapters 19 Homework Assignment
Read Chapter 19 and Review Key Terms
Prepare typed solutions to the following end-of-chapter questions and problems. Be prepared to discuss the following questions and problems during the class session.
Review Questions 1, 3, 4, 5, 8, 9, 12, 13, 14
1. The statement is correct in that all companies “should” be audited annually, but more could be added that all publically traded companies have to be audited annually.
3. It depends on what service the CPA is performing. Those who provide auditing services can identify themselves as auditors. Those CPA’s who working in taxation and consulting should identify themselves as CPA’s since they do not provide auditing services.
4. An auditor can express an unmodified report for nonpublic companies that do not follow GAAP, however, a paragraph will state that the company does not follow it. For publically traded companies in the US an unmodified report cannot be made.
5. Cash basis, tax basis, contractual basis, and regulatory basis.
9. Ensure balance sheets and income statements are accurate. Check to make sure receivables and payables are accurate. Ensure assets are valued correctly. Anything that might suspect fraud or management misstatement.
12. Analytical procedures, Inquires
13. A review involves looking at financial statements, while audits involve the additional procedure of looking at internal controls
14. Compare trial balances compare receivables, payables.