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1. Strayer-University ACC 403 Assignment
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Assignment 2: Audit Planning and Control Due Week 8 and worth 280
points
It is common industry knowledge that an audit plan provides the specific guidelines auditors must
follow when conducting an external audit. External public accounting firms conduct external audits to
ensure outside stakeholders that the company’s financial statements are prepared in accordance
with generally accepted accounting principles (GAAP) or International Financial Reporting Standards
(IFRS) standards.
Use the Internet to select a public accounting company that appeals to you. Imagine that you are a
senior partner in a public accounting firm hired to complete an audit for the chosen public company.
Write a four to six (4-6) page paper in which you:
Outline the critical steps inherent in planning an audit and designing an effective audit program.
Based upon the type of company selected, provide specific details of the actions that the company
should undertake during planning and designing the audit program. Examine at least two (2)
performance ratios that you would use in order to determine which analytical tests to perform.
Identify the accounts that you would test, and select at least three (3) analytical procedures that you
would use in your audit. Analyze the balance sheet and income statement of the company that you
have selected, and outline your method for evidence collection which should include, but not be
limited to, the type of evidence to collect and the manner in which you would determine the
sufficiency of the evidence.
Discuss the audit risk model, and ascertain which sampling or non-sampling techniques you would
use in order to establish your preliminary judgment about materiality. Justify your response.
Assuming that the end result is an unqualified audit report, outline the primary responsibilities of th e
audit firm after it issues the report in question. Use at least two (2) quality academic resources in this
assignment. Note: Wikipedia and other Websites do not qualify as academic resources. Your
assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all
sides; citations and references must follow APA or school-specific format. Check with your professor

2. for any additional instructions. Include a cover page containing the title of the assignment, the
student’s name, the professor’s name, the course title, and the date. The cover page and the
reference page are not included in the required assignment page length. The specific course
learning outcomes associated with this assignment are:
Plan and design a generalized audit program. Determine the nature and extent of evidence
accumulated to conduct an audit after considering the unique circumstances of an engagement.
Evaluate a company’s various risk factors and the related impact to the audit process. Evaluate
effective internal controls that minimize audit risk and potentially reduce the risk of fraud. Use
technology and information resources to research issues in auditing. Write clearly and concisely
about auditing using proper writing mechanics.
Grading for this assignment will be based on answer quality, logic / organization of the paper, and
language and writing skills, using the following rubric.
Points: 280
Assignment 2: Audit Planning and Control
Criteria
Unacceptable Below 60% F
Meets Minimum Expectations 60-69% D
Fair 70-79% C
Proficient 80-89% B
Exemplary 90-100% A
1. Outline the critical steps inherent in planning an audit and designing an effective audit program.
Based upon the type of company selected, provide specific details of the actions that the company
should undertake during planning and designing the audit program. Weight: 15%
Did not submit or incompletely outlined the critical steps inherent in planning an audit and designing
an effective audit program. Did not submit or incompletely provided specific details of the actions
that the company should undertake during planning and designing the audit program, based upon
the type of company selected.
Insufficiently outlined the critical steps inherent in planning an audit and designing an effective audit
program. Insufficiently provided specific details of the actions that the company should undertake
during planning and designing the audit program, based upon the type of company selected.
Partially outlined the critical steps inherent in planning an audit and designing an effective audit
program. Partially provided specific details of the actions that the company should undertake during
planning and designing the audit program, based upon the type of company selected.

3. Satisfactorily outlined the critical steps inherent in planning an audit and designing an effective audit
program. Satisfactorily provided specific details of the actions that the company should undertake
during planning and designing the audit program, based upon the type of company selected.
Thoroughly outlined the critical steps inherent in planning an audit and designing an effective audit
program. Thoroughly provided specific details of the actions that the company should undertake
during planning and designing the audit program, based upon the type of company selected.
2. Examine at least two (2) performance ratios that you would use in order to determine which
analytical tests to perform. Identify the accounts that you would test, and select at least three (3)
analytical procedures that you would use in your audit. Weight: 15%
Did not submit or incompletely examined at least two (2) performance ratios that you would use in
order to determine which analytical tests to perform. Did not submit or incompletely identified the
accounts that you would test; did not submit or incompletely selected at least three (3) analytical
procedures that you would use in your audit.
Insufficiently examined at least two (2) performance ratios that you would use in order to determine
which analytical tests to perform. Insufficiently identified the accounts that you would test;
insufficiently selected at least three (3) analytical procedures that you would use in your audit.
Partially examined at least two (2) performance ratios that you would use in order to determine
which analytical tests to perform. Partially identified the accounts that you would test; partially
selected at least three (3) analytical procedures that you would use in your audit.
Satisfactorily examined at least two (2) performance ratios that you would use in order to determine
which analytical tests to perform. Satisfactorily identified the accounts that you would test;
satisfactorily selected at least three (3) analytical procedures that you would use in your audit.
Thoroughly examined at least two (2) performance ratios that you would use in order to determine
which analytical tests to perform. Thoroughly identified the accounts that you would test; thoroughly
selected at least three (3) analytical procedures that you would use in your audit.
3. Analyze the balance sheet and income statement of the company that you have selected, and
outline your method for evidence collection which should include, but not be limited to, the type of
evidence to collect and the manner in which you would determine the sufficiency of the evidence.
Weight: 15%
Did not submit or incompletely analyzed the balance sheet and income statement of the company
that you have selected; did not submit or incompletely outlined your method for evidence collection
which included, but was not limited to, the type of evidence to collect and the manner in which you
would determine the sufficiency of the evidence.
Insufficiently analyzed the balance sheet and income statement of the company that you have
selected; insufficiently outlined your method for evidence collection which included, but was not
limited to, the type of evidence to collect and the manner in which you would determine the
sufficiency of the evidence.

4. Partially analyzed the balance sheet and income statement of the company that you have selected;
partially outlined your method for evidence collection which included, but was not limited to, the type
of evidence to collect and the manner in which you would determine the sufficiency of the evidence.
Satisfactorily analyzed the balance sheet and income statement of the company that you have
selected; satisfactorily outlined your method for evidence collection which included, but was not
limited to, the type of evidence to collect and the manner in which you would determine the
sufficiency of the evidence.
Thoroughly analyzed the balance sheet and income statement of the company that you have
selected; thoroughly outlined your method for evidence collection which included, but was not limited
to, the type of evidence to collect and the manner in which you would determine the sufficiency of
the evidence.
4. Discuss the audit risk model, and ascertain which sampling or non-sampling techniques you
would use in order to establish your preliminary judgment about materiality. Justify your response.
Weight: 15%
Did not submit or incompletely discussed the audit risk model; did not complete or incompletely
ascertained which sampling or non-sampling techniques you would use in order to establish your
preliminary judgment about materiality. Did not submit or incompletely justified your response.
Insufficiently discussed the audit risk model; insufficiently ascertained which sampling or non-
sampling techniques you would use in order to establish your preliminary judgment about materiality.
Insufficiently justified your response.
Partially discussed the audit risk model; partially ascertained which sampling or non-sampling
techniques you would use in order to establish your preliminary judgment about materiality. Partially
justified your response.
Satisfactorily discussed the audit risk model; satisfactorily ascertained which sampling or non-
sampling techniques you would use in order to establish your preliminary judgment about materiality.
Satisfactorily justified your response.
Thoroughly discussed the audit risk model; thoroughly ascertained which sampling or non-sampling
techniques you would use in order to establish your preliminary judgment about materiality.
Thoroughly justified your response.
5. Assuming that the end result is an unqualified audit report, outline the primary responsibilities of
the audit firm after it issues the report in question. Weight: 15%
Did not submit or incompletely outlined the primary responsibilities of the audit firm after it issues the
report in question, assuming that the end result is an unqualified audit report.
Insufficiently outlined the primary responsibilities of the audit firm after it issues the report in
question, assuming that the end result is an unqualified audit report.
Partially outlined the primary responsibilities of the audit firm after it issues the report in question,
assuming that the end result is an unqualified audit report.

5. Satisfactorily outlined the primary responsibilities of the audit firm after it issues the report in
question, assuming that the end result is an unqualified audit report.
Thoroughly outlined the primary responsibilities of the audit firm after it issues the report in question,
assuming that the end result is an unqualified audit report.
6. 2 references (or number in the assignment) Weight: 5%
No references provided
Does not meet the required number of references, and / or references are of poor quality.
Meets the required number of references; some or all references poor quality choices.
Meets number of required references; all references high quality choices.
Exceeds number of required references; all references high quality choices.
7. Writing Mechanics, Grammar, and Formatting Weight: 5%
Serious and persistent errors in grammar, spelling, punctuation, or formatting.
Numerous errors in grammar, spelling, and punctuation.
Partially free of errors in grammar, spelling, punctuation, or formatting.
Mostly free of errors in grammar, spelling, punctuation, or formatting.
Error free or almost error free grammar, spelling, punctuation, or formatting.
8. Appropriate use of APA in-text citations and reference section (if applicable, might not apply to
some 100 level courses such as ACC100) Weight: 5%
Lack of in-text citations and / or lack of reference section.
In-text citations and references are given, but not in APA format.
In-text citations and references are provided, but they are only partially formatted correctly in APA
style.
Most in-text citations and references are provided, and they are generally formatted correctly in APA
style.
In-text citations and references are error free or almost error free and consistently formatted
correctly in APA style.
9. Information Literacy/Integration of Sources Weight: 5%
Serious errors in the integration of sources, such as intentional or accidental plagiarism, or failure to
use in-text citations.
Sources are rarely integrated using effective techniques of quoting, paraphrasing, and summarizing.

6. Sources are partially integrated using effective techniques of quoting, paraphrasing, and
summarizing.
Sources are mostly integrated using effective techniques of quoting, paraphrasing, and
summarizing.
Sources are consistently integrated using effective techniques of quoting, paraphrasing, and
summarizing.
10. Clarity and Coherence of Writing Weight: 5%
Information is confusing to the reader and fails to include reasons and evidence that logically support
ideas.
Information is somewhat confusing with not enough reasons and evidence that logically support
ideas.
Information is partially clear with minimal reasons and evidence that logically support ideas.
Information is mostly clear and generally supported with reasons and evidence that logically support
ideas.
Information is provided in a clear, coherent, and consistent manner with reasons and evidence that
logically support ideas.
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Due-Week-8-and-wort-16414
ACC 403 HOMEWORK WEEK 9
Chapter16: Problems 16-22(a-c), 16-26(a-e), and 16-33(a-c)
16-22 (Objective 16-3)The following questions concern audit objectives and management assertions
for accounts receivable. Choose the best response.
a . Which of the following will most likely provide the most assurance concerning the accuracy
balance-related objective for accounts receivable?
(1) Vouch amounts in the subsidiary ledger to details on shipping documents.

7. (2) Compare receivable turnover ratios with industry statistics for reasonableness.
(3) Inquire about receivables pledged under loan agreements.
(4) Assess the allowance for uncollectible accounts for reasonableness.
b . Which of the following audit procedures will best uncover an understatement of sales and
accounts receivable?
(1) Test a sample of sales transactions, selecting the sample from prenumbered shipping
documents.
(2) Test a sample of sales transactions, selecting the sample from sales invoices recorded in the
sales journal.
(3) Confirm accounts receivable.
(4) Review the aged accounts receivable trial balance.
c . The confirmation of customers’ accounts receivable rarely provides reliable evidence about the
completeness assertion because
(1) Customers may not be inclined to report understatement errors in their accounts.
(2) recipients usually respond only if they disagree with the information on the request.
(3) many customers merely sign and return the confirmation without verifying details.
(4) there is likely to be reliable third party evidence available.
16-26 (Objective 16-3)Niosoki Auto Parts sells new parts for foreign automobiles to auto dealers.
Company policy requires that a prenumbered shipping document be issued for each sale. At the
time of pickup or shipment, the shipping clerk writes the date on the shipping document. The last
shipment made in the fiscal year ended August 31, 2013, was recorded on document 2167.
Shipments are billed in the order that the billing clerk receives the shipping documents.
For late August and early September, shipping documents are billed on sales invoices as follows:
Shipping Document No. Sales Invoice No.
2163 5437
2164 5431
2165 5432

8. 2166 5435
2167 5436
2168 5433
2169 5434
2170 5438
2171 5440
2172 5439
The August and September sales journals have the following information included:
SALES JOURNAL — AUGUST 2013
Day of Month Sales Invoice No. Amount of Sale
30 5431 $ 726.11
30 5434 4,214.30
31 5432 419.83
31 5433 1,620.22
31 5435 47.74
SALES JOURNAL — SEPTEMBER 2013
Day of Month Sales Invoice No. Amount of Sale
1 5437 $2,541.31
1 5436 106.39
1 5438 852.06
2 5440 1,250.50
2 5439 646.58
a . What are the accounting requirements for a correct sales cutoff?
b . Which sales invoices, if any, are recorded in the wrong accounting period? Prepare an adjusting
entry to correct the financial statement for the year ended August 31, 2013. Assume that the
company uses a periodic inventory system (inventory and cost of sales do not need to be adjusted).

9. c . Assume that the shipping clerk accidentally wrote August 31 on shipping documents 2168
through 2172. Explain how that will affect the correctness of the financial statements. How will you,
as an auditor, discover that error?
d . Describe, in general terms, the audit procedures you would follow in making sure that cutoff for
sales is accurate at the balance sheet date.
e . Identify internal controls that will reduce the likelihood of cutoff misstatements. How would you
test each control?
16-33 (Objective 16-4)In the confirmation of accounts receivable for the Reliable Service
Company, 85 positive and no negative confirmations were mailed to customers. This represents
35% of the dollar balance of the total accounts receivable. Second requests were sent for all
nonresponses, but there were still 10 customers who did not respond.
The decision was made to perform alternative procedures on the 10 unanswered confirmation
requests. An assistant is requested to conduct the alternative procedures and report to the senior
auditor after he has completed his tests on two accounts. He prepared the following information for
the audit files:
1. Confirmation request no. 9
Customer name — Jolene Milling Co.
Balance — $3,621 at December 31, 2013
Subsequent cash receipts per the accounts receivable master file: January 15, 2014 — $1,837
January 29, 2014 — $1,263
February 6, 2014 — $1,429

10. 2. Confirmation request no. 26
Customer name — Rosenthal Repair Service
Balance — $2,500 at December 31, 2013
Subsequent cash receipts per the accounts receivable master file February 9, 2014 — $500
Sales invoices per the accounts receivable master file (I examined the duplicate invoice) September
1, 2013 — $4,200
a . If you are called on to evaluate the adequacy of the sample size, the type of confirmation used,
and the percent of accounts confirmed, what additional information will you need?
b . Discuss the need to send second requests and perform alternative procedures for non-
responses.
c . Evaluate the adequacy of the alternative procedures used for verifying the two non-responses.
Chapter 17: Problems 17-28(a-c), 17-31( a-e), and 17-33(a-c)
17-28 (Objective 17-2)You are evaluating the results of a nonstatistical sample of 85 accounts
receivable confirmations for the Bohrer Company. Information on the sample and population are
included below. An overstatement or understatement of more than $100,000 is considered material.
Sample Population
# of Recorded # of Recorded
Stratum Accounts Value Accounts Value
1 > $75,000 8 $1,287,643 8 $1,287,643
2 $10,000 – $74,999 40 1,349,678 257 4,348,268
3 < $10,000 25 94,637 712 947,682
___ ___________ ____ ___________

11. 73 $2,731,958 977 $6,583,593
The confirmation responses were received without exception, other than the following
items:
Acct. Recorded Confirmation
No. Value Response Auditor Follow-up
147 $ 24,692 $ 23,597 Customer was charged the wrong price.
228 183,219 157,216 $26,003 shipment recorded on December
30th; goods were not shipped until January 3rd.
278 7,546 5,546 Customer sent $2,000 payment on
December 29th; received on January 2nd.
497 15,319 0 $17,443 shipment recorded on December
30th;goods were not shipped until January 2nd.
Acct. Recorded Confirmation
No. Value Response Auditor Follow-up
564 8,397 7,858 Customer received less than the full quantity
ordered.
653 32,687 19,328 $13,359 shipment recorded on December
30th;
goods were not shipped until January 2nd.
830 5,286 0 $5,286 shipment made December 30th;
goods were received by the customer on
January 4th.
a . Evaluate each of the confirmation exceptions to determine whether they represent
misstatements.

12. b . Estimate the total amount of misstatement in the accounts receivable population.
c . Is the population acceptable? If not, indicate what follow-up action(s) you consider
appropriate in the circumstances.
17-31 (Objective 17-3) You intend to use MUS as a part of the audit of several accounts for
Roynpower Manufacturing Company. You have done the audit for the past several years, and there
has rarely been an adjusting entry of any kind. Your audit tests of all tests of controls and
substantive tests of transactions cycles were completed at an interim date, and control risk has been
assessed as low. You therefore decide to use an ARIA of 10% and a ratio of expected misstatement
to tolerable misstatement of 0% for all tests of details of balances.
You intend to use MUS in the audit of the three most material asset balance sheet account
balances: accounts receivable, inventory, and marketable securities. You feel justified in using the
same ARIA for each audit area because of the low assessed control risk.
The recorded balances and related information for the three accounts are as follows:
Recorded Value
Accounts receivable $ 3,600,000
Inventory 4,800,000
Marketable securities 1,600,000
_____________
$ 10,000,000
Net earnings before taxes for Roynpower are $2,000,000. You decide that a combined misstatement
of $100,000 is allowable for the client.
The audit approach to be followed will be to determine the total sample size needed for all three
accounts. A sample will be selected from all $10 million, and the appropriate testing for a sample
item will depend on whether the item is a receivable, inventory, or marketable security. The audit

13. conclusions will pertain to the entire $10 million, and no conclusion will be made about the three
individual accounts unless significant misstatements are found in the sample.
a . Evaluate the audit approach of testing all three account balances in one sample.
b . Calculate the required sample size for a combined sample of all three accounts. Use
c . Calculate the required sample size for each of the three accounts, assuming you decide that the
tolerable misstatement in each account is
d . Assume that you select the random sample using computer software. How will you identify which
sample item in the population to audit for the number 4,627,871?
e . Assume that you select a sample of 200 sample items for testing and you find one misstatement
in inventory. The recorded value is $987.12 and the audit value is $887.12. Calculate the
misstatement bounds for the three combined accounts and reach appropriate audit conclusions.
The population cannot be accepted as stated in an absence of additional tests.
17-33 (Objective 17-5)In auditing the valuation of inventory, the auditor, Claire Butler, decided to use
difference estimation. She decided to select an unrestricted random sample of 80 inventory items
from a population of 1,840 that had a book value of $175,820.
Butler decided in advance that she was willing to accept a maximum misstatement in the population
of $6,000 at an ARIA of 5 percent. There were eight misstatements in the sample, which were as
follows:
Audit Value Book Value Sample Misstatements
$ 812.50 $ 740.50 $(72.00 )
12.50 78.20 65.70

14. 10.00 51.10 41.10
25.40 61.50 36.10
600.10 651.90 51.80
.12 0 (.12 )
51.06 81.06 30.00
83.11 104.22 21.11
__________ __________ ________
Total $1,594.79 $1,768.48 $173.69
a . Calculate the point estimate, the computed precision interval, the confidence interval, and the
confidence limits for the population. Label each calculation. Use a computer for this purpose
(instructor’s option).
b . Should Butler accept the book value of the population? Explain.
c . What options are available to her at this point?
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Problems-16-22-a-c-16-19103