Devry acct 555 entire course

DEVRY ACCT 555 Entire Course
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ACCT 555 Week 1 Homework
Chapter 2, pages 41–44: Problems 2-16, 2-17, 2-19, and 2-20
Chapter 3, pages 67–69: Problems 3-23, 3-25, and 3-26
4-18, 4-21, 4-22, 5-17, 5-19, 5-21, 5-26, 11-19, 11-20
ACCT 555 Week 3 Homework Assignment
6-19 (Objective 6-1) The following questions concern the reasons auditors do audits.
Choose the best response.

Which of the following best describes the reason why an independent auditor
reports on financial statements?
Because of the risk of material misstatement, an audit should be planned and
performed with an attitude of
The major reason an independent auditor gathers audit evidence is to
6-20 (Objective 6-3) The following questions deal with errors and fraud. Choose the
best response.
An independent auditor has the responsibility to design the audit to provide
reasonable assurance of detecting errors and fraud that might have a material effect
on the financial statements. Which of the following, if material, is a fraud as defined
in auditing standards?
What assurance does the auditor provide that errors, fraud, and direct-effect illegal
acts that are material to the financial statements will be detected?
6-27 (Objectives 6-6, 6-7) The following are specific transaction-related audit
objectives applied to the audit of cash disbursement transactions (a through f),
management assertions about classes of transactions (1 through 5), and general
transaction-related audit objectives (6 through 11).
Specific Transaction-Related Audit Objective
Recorded cash disbursement transactions are for the amount of goods or services
received and are correctly recorded.
7-25 (Objectives 7-3, 7-4) The following questions concern persuasiveness of
evidence. Choose the best response.
Which of the following types of documentary evidence should the auditor consider to
be the most reliable?
Which of the following statements concerning audit evidence is true?
Audit evidence can come in different forms with different degrees of persuasiveness.
Which of the following is the least persuasive type of evidence?
Which of the following presumptions is correct about the reliability of audit
evidence?

7-26 (Objectives 7-5, 7-6) The following questions concern audit documentation.
Which of the following isnota primary purpose of audit documentation?
During an audit engagement, pertinent data are compiled and included in the audit
files. The audit files primarily are considered to be
Although the quantity, type, and content of audit documentation will vary with the
circumstances, audit documentation generally will include the
The permanent file of an auditor’s working papers most likely would include copies
of the
7-27 (Objective 7-4) The following are examples of documentation typically obtained
by auditors:
7-28 (Objective 7-4) The following are examples of audit procedures:
8-25 (Objectives 8-1, 8-3) The following questions concern the planning of the
engagement. Select the best response.
Which of the following is an effective audit planning procedure that helps prevent
misunderstandings and inefficient use of audit personnel?
8-28 (Objectives 8-2, 8-3, 8-4, 8-5) The following are various activities an auditor
does during audit planning.
9-22 (Objectives 9-1, 9-2) The following questions deal with materiality. Choose the
best response.
9-23 (Objectives 9-6, 9-8) The following questions concern audit risk. Choose the
best response.

· Some account balances, such as those for pensions and leases, are the result of
complex calculations. The susceptibility to material misstatements in these types of
accounts is defined as
9-24 (Objective 9-9) The following questions deal with audit risk and evidence.
10-30 (Objectives 10-1, 10-2, 10-7) The following are general questions about
internal control. Choose the best response.
· When considering internal control, an auditor must be aware of the concept of
reasonable assurance, which recognizes that the
Chapter 14 Problems 14-21, 14-22, 14-23 14-24,
Chapter 15 Problems 15-22, 15-24, 15-25,
Chapter 16 Problem 220,21,22,24,28
Chapter 17 Problem 28
20-17
a.A factory foreman at Steblecki Corporation discharged an hourly worker but did
not notify the human resources department. The foreman then forged the worker’s
signature on time cards and work tickets and, when giving out the checks, diverted
the payroll checks drawn from the discharged worker to his own use. The most
effective procedure for preventing this activity is to

An auditor found that employee time records in one department are not properly
approved by the supervisor. Which of the following could result?
The purpose of segregating the duties of hiring personnel and distributing payroll
checks is to separate the
20-20
· Identify whether each of the procedures is primarily a test of control or a
substantive test of transactions.
· Identify the transaction-related audit objective(s) of each of the procedures.
21-17
Which of the following controls will most likely justify a reduced assessed level of
control risk for the occurrence assertion for purchases of inventory?
21-18
When an auditor tests a client’s cost accounting records, the auditor’s tests are
primarily designed to determine that
21-19
Which of the following procedures is the auditor least likely to perform on the actual
date the physical inventory count is observed?
21-20
For each of the preceding questions, state the purpose of the internal control.
For each internal control, list a test of control to test its effectiveness.
For each of the preceding questions, identify the nature of the potential financial
misstatement(s) if the control is not in effect.
For each of the potential misstatements in part c, list a substantive audit procedure
to determine whether a material misstatement exists
ACCT 555 Week 7 Course Project Smackey Dog Foods Inc

ACCT 555 Midterm
1. (TCO F) Which of the following procedures should an auditor generally perform
regarding subsequent events?
2. (TCO A) An auditor reads the letter of transmittal accompanying a county’s
comprehensive annual financial report and identifies a material inconsistency with
the financial statements. The auditor determines that the financial statements do not
require revision. Which of the following actions should the auditor take?
3. (TCO F) An auditor’s independence is considered impaired if the auditor has
4. (TCO B) When an independent CPA is associated with the financial statements of
a publicly held entity but has not audited or reviewed such statements, the
appropriate form of report to be issued must include a(an):
5. (TCO F) Which is not a characteristic of the reliability of evidence?
6. (TCO C) According to PCAOB standards, the nature and extent of required
planning activities for an issuer audit are influenced by all of the following factors,
except for:
7. (TCO F) Analytical procedures must be used during which phase(s) of the audit?
Test of controls OR planning OR completion
8. (TCO F) In a financial statement audit, inherent risk is evaluated to help an
auditor assess which of the following?
9. (TCO F) The primary purpose of performing analytical procedures in the
planning phase of an audit is to
10. (TCO G) The most widely used profitability ratio is
11. (TCO G) Which ratio is best used to assess a company’s ability to meet its long-
term debt obligations?
12. (TCO A) Match the following definitions to the appropriate terms.
13. (TCO B) The following is a portion of a qualified audit report issued for a private
company.
To the shareholders of Tamarak Corporation,

We have audited the accompanying balance sheet of Tamarak Corporation as of
October 31, 2009, and the related statements of income, retained earnings, and cash
flows for the past year. These financial statements are the responsibility of the
company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in
the United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
The company has included in property and debt in the accompanying balance sheet
certain lease obligations that, in our opinion, should be expensed in order to
conform with generally accepted accounting principles. If these lease obligations
were capitalized, property would be decreased by $4,000,000, long-term debt by
$2,000,000, and retained earnings by $180,000 as of October 31, 2009, and net
income and earnings per share would be decreased by $180,000 and $0.62,
respectively, for the past year.
3. (TCO C) The following situation involves a possible violation of the AICPA’s code
of professional conduct. For this situation, (1) determine the applicable rule number
from the code, (2) decide whether or not the code has been violated, and (3) briefly
explain how the situation violates (or does not violate) the code. Your answer should
be set up something like this:
Rule # _____ Violation? Yes or No.
Provide a one- or two-line explanation.
Auditor Tex Gato of the CPA firm Smackey and Smackey, CPAs, enjoyed auditing his
favorite client, Super Pup Dog Food, because the client would allow him to take home
to his dog a variety of dog food samples that amounted to a year’s worth of dog food.
4. (TCO C) The following situation involves a possible violation of the AICPA’s code
of professional conduct. For this situation, (1) determine the applicable rule number
from the code, (2) decide whether or not the code has been violated, and (3) briefly
explain how the situation violates (or does not violate) the code. Your answer should
be set up something like this:
Rule # _____ Violation? Yes or No.
Provide a one- or two-line explanation.

Howard Cunningham & Co., CPAs, designates its firm as Members of the American
Institute of Certified Public Accountants. All of the partners of the firm are CPAs.
However, one of the partners has recently chosen to allow her membership to lapse
because of personal reasons.
5. (TCO C) Under the provisions of the Sarbanes-Oxley Act of 2002 (SOX), the audit
committee of a public company has specific guidelines to which employees must
adhere. Discuss some of the mandated features of the audit committee of a public
company under SOX.
6. (TCO D) Discuss some of the steps the AICPA and the accounting profession as a
whole can and are taking to reduce practitioners’ exposure to lawsuits. You answer
should provide at least five steps.
7. (TCO F) Match nine of the terms (A–K) with the definitions provided below (1–
9).
A – Foot
B – Compute
C – Scan
D – Inquire
E – Count
F – Trace
G – Recompute
H – Read
I – Examine
J – Observe
K – Compare
_____ 1: A calculation done by the auditor independent of the client
_____ 2: Addition of a column of numbers to determine if the total is the same as the
client’s
_____ 3: A comparison of information in two different locations
_____ 4: A use of the senses to assess certain activities
_____ 5: Following details of transactions from original documents to journals
_____ 6: A less detailed examination of a document or record to determine if there is
something unusual warranting further investigation
_____ 7: Obtaining information from the client in response to specific questions
_____ 8: A determination of assets on hand at a given time
_____ 9: An examination of written information to determine facts pertinent to the
audit
8. (TCO G) Discuss the essential activities involved in the initial planning of an
audit.

ACCT 555 Final Exam
1. (TCO B) An auditor was unable to obtain sufficient appropriate audit evidence
concerning certain transactions due to an inadequacy in the entity’s accounting
records. The auditor would choose between issuing a(an): (Points : 5)
2. (TCO K) An auditor should consider which of the following when evaluating the
ability of a company to continue as a going concern? (Points : 5)
3. (TCO A) An auditor’s independence is considered impaired if the auditor has:
(Points : 5)
4. (TCO H) Which of the following should be included as a written representation
from management? (Points : 5)
5. (TCO E) An auditor would most likely be concerned with internal controls that
provide reasonable assurance about the: (Points : 5)
1.(TCO A) In performing an ATTEST Engagement A CPA would be required to do what
as part of the engagement? (Points : 19)
2.(TCO B) When a CPA performs an Audit the Client is always looking to receive a
“CLEAN OPINION” or an Unqualified Opinion. Explain what your client must do for a
CPA to justify that Unqualified Opinion? (Points : 19)
3.(TCO C) – Based upon the below 4 situations – explain your position of “why” or
“why not” the following circumstances would have violated the professions ethical
standards when you are a practicing CPA?
4.(TCO D) Discuss five steps individual practicing auditors can take to minimize their
legal liability.(Points : 19)
5.(TCO F) Sarbanes Oxley requires that per Section 404 that Internal Controls within
a publicly held company are to be reviewed, evaluated and tested at year end to
insure that adequate controls are in place. In addition to understanding the Internal
Controls present within your client’s company, the auditor must also evaluate
whether these controls are in place, and implemented. How does an auditor evaluate
these controls to see that they are working and in place?(Points : 19)
1. (TCO E) What is COSO? Describe the 5 elements of COSO’s Internal Control-
Integrated Framework. Provide an example of each of those components and explain

why they are important in providing “Reliable Financial Reporting” for a company.
Please provide a complete answer for full points. (Points : 30)
2.(TCO G) Business risk must be assessed in performing an audit.
(a) Define business risk in association with an audit and describe several sources of
such risk.
(b) How does business risk relate to the performance of preliminary analytical
procedures in an audit?
(c) There are four major areas in planning an audit engagement and there are
subparts to each of the four major areas. Please identify the four major areas and the
subparts that are associated with the major areas.(Points : 30)
3.(TCO H) Audit Risk consists of inherent risk, control risk, and detection risk.
(a) Please completely define each of the above.
(b) Indicate whether each of the statements below is true or false and explain your
position:
(1) The risk that material misstatement will not be prevented or detected on a timely
basis by internal controls can be reduced to zero by having effective controls in
place.
(2) Detection Risk is a function of the efficiency of an auditing procedure.
(3) Cash is more susceptible to theft than an inventory of coal because it has greater
inherent risk?
(4) The Inherent risk of the theft of an inventory of cellphones at a mall store is
greater than the misappropriation of cash at a COSTCO Store?(Points : 30)
4.(TCO I) Accounts Receivable – For each of the following, please explain if an
auditor’s review of the client’s sales cutoff would detect these problems:
(a) Would excessive goods returned for credit be detected by a sales cut-off test –
why or why not?
(b) Would unrecorded sales discounts be detected by a sales cut-off test – why or
why not?
(c) Lapping of year-end accounts receivable be detected by a sales cut-off test – why
or why not?
(d) Inflated sales for the year – could it be detected by a sales-cut-off test – why or
why not?(Points : 30)

5.(TCO J) One of the major problems in a computer system is that incompatible
functions may be performed by the same individual. Identify from the below choices
the control compensating for inadequate segregation of duties in a computer system.
Explain why you have selected your response.
(a) Echo Checks
(b) A check digit system
(c) Computer-Generated hash totals
(d) A computer access log (Points : 30)
6.(TCO K) You are the Senior Auditor for WWZ Co. and you have completed the
testing of all the accounts. However, prior to issuing your report, what are at least
five other procedures or reviews that must be performed prior to issuing your
report? Explain your responses(Points : 30)
ACCT 555 Week 8 Final Exam
1. (TCO A) There are ten generally accepted auditing standards, divided into three
categories. What are the standards of reporting?
2. (TCO A) Distinguish between generally accepted auditing standards (GAAS) and
generally accepted accounting principles (GAAP). What professional organization
establishes GAAS? What professional organization establishes GAAP?
3. Assume you are the partner in charge of the audit of Franklin Corporation’s
2002 financial statements. The audit report has not yet been prepared. In each
independent situation following, indicate the appropriate opinion you should issue
and why you would issue that opinion
4. State whether there is any violation of the AICPA Code of Professional Conduct,
and the nature of the violation. Where there is a violation, evaluate the potential
legal liability the accountant may face. Justify your position
5. Discuss at least five of the actions that can be taken by individual CPAs, to
protect themselves from legal liability
6. (TCO E) Bobby Thigpen, waiter at Relief Stop, has been taking cash from the
restaurant. Thigpen prepares a customer’s check from which the customer pays.
Thigpen then destroys the check, and prepares a new one with different items of

lower cost. He presents the new check and indicated amount on the check to the
cashier, and saves the excess cash for himself. Question: Formulate three internal
control features that the restaurant could implement, to eliminate this defalcation
7. Three types of legal documents and records that auditors examine in the
planning phase of an audit are the corporate charter and bylaws, corporate minutes
of meetings of the board of directors and stockholders, and contracts. Discuss the
audit-relevant information contained in each of these three types of documents that
an auditor should be aware of early in the audit.
8. (TCO F) What are specific audit objectives? Explain their relationship to the
general audit objectives. (Points: 25)
2.(TCO H) Explain why it is necessary to allocate the preliminary judgment about
materiality to individual accounts (segments) in the financial statements. Also
explain why allocating to balance sheet accounts is more common than allocating to
income statement accounts. (Points: 25)
Allocating the preliminary judgment about materiality to individual segments is
necessary because evidence is accumulated for segments rather than for the
financial statements as a whole. Allocating to segments establishes a tolerable
misstatement amount for each segment, which helps the auditor decide the
appropriate audit evidence to accumulate for each segment. Most practitioners
allocate materiality to balance sheet accounts rather than income statement
accounts because there are fewer balance sheet than income statement accounts
3. (TCO I) For each of the following potential misstatements, provide one potential
audit test that could be used to detect the misstatement
4. (TCO I) Describe how the auditor tests the classification objective for accounts
receivable. (Points: 25)
The classification objective is tested by reviewing the aged trial balance for material
receivables from affiliates, officers, directors, or other related parties. If notes
receivable or accounts that should not be classified as a current asset are included
with the regular accounts, these should also be segregated. Finally, if credit balances
in accounts receivable are significant, it is appropriate to reclassify them as accounts
payable
5. The design of tests of details of balances for inventory is affected by audit
results from multiple cycles. Identify the cycles, other than the inventory and
warehousing cycle, that affect the audit of inventory
6. Describe three computer auditing techniques available to the auditor

7. (TCO K) Match seven of the terms (a-p) with the description/definitions
provided below (1-7):

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