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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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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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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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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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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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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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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Answer: auditors accept some level of risk in performing the audit function. Correct Answer: auditors accept some level of risk in performing the audit function. Question 2 2 out of 2 points ________ misstatements are those where the auditor can determine the amount of the misstatement in the account. Answer Selected Answer: Known Correct Answer: Known Question 3 2 out of 2 points When auditors allocate the preliminary judgment about materiality to account balances‚ the materiality
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Directors: Qualification/disqualification‚ appointment‚ duties and liabilities of directors. Also‚ explain ‘independent directors’ and their responsibilities. Company law in Malaysia is governed by Companies Act 1965. This Act is modelled on English Companies Act 1948 and Australian Uniform Companies Act 1961. Therefore‚ references will be made to English and Australian cases for interpretation of the law on certain areas. In every company there are directors to manage and direct the company.
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To: Ted Katz‚ Partner‚ Kartz & Sargood LLP From: CA/CGA/CMA (External Auditor) Re: Bulletproof Greens (GREENS) 2014 Audit planning memo Audit Planning Memo Risk of Material Misstatement The risk of material misstatement is higher because: The deadline for the audit planning memo is due in a week. Furthermore‚ all year-end information will be ready by March 15‚2015 which means for now we will be auditing without complete information on GREENS. With three warehouses at separate places‚ GREEN’s operation
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