06 Feb Mitchell knows that the following thr

ACC522 Advanced Audit Issues

Unit 6 Assignment

This is a 2 -part assignment

Student Name: _____________________________________

Part 1

Read Case 7 – Designing Substantive Audit Tests: Compensation Plans

Instructions: Answer all the questions that appear below using the template provided:

Paul Reubens is a new staff auditor recently hired by the firm of Abernethy and Chapman. As one of his initial assignments, he is to perform several audit procedures in the Lakeside engagement. He has already completed a set of payroll tests and prepared the audit document presented in Exhibit 7-1. The firm of Abernethy and Chapman has a policy that the senior (in-charge) auditor on an engagement must review and approve all audit documentation. If errors or problems are found, the audit documents are returned to the staff auditor for appropriate revision. This review process helps to ensure that each audit document provides a clear and complete indication of the procedures that were performed and the evidence that was accumulated.

Analyze the audit document in Exhibit 7-1 as if you were the senior auditor. Prepare a list for Reubens of the errors and problems that are present in his audit document. For each, indicate the reason that the current presentation is not acceptable. Refer to Case 6 for standard audit document content and format.

Case 7 – Exercise 1

The Lakeside Company

Payroll Tests

In-charge Review Comments

December 31, 2012

Prepared by:

Date:

Item on Working Paper

Problem

Part 2

Read Case 8 – Observation of Physical Inventory Count

Instructions: Answer all the questions that appear below using the template (case 8 exercise 1)

provided below:

Mitchell knows that the following three audit objectives related to inventory need to be accomplished:

verify that the physical count she observed agrees with the inventory listing shown in Exhibit 8-4
verify that the inventory listing (Exhibit 8-4) provides a fairly presented inventory cost balance, and
verify that the reconciling items on Exhibit 8-5 are valid and reasonable.
She assigns these tasks to Paul Reubens, a new staff auditor recently hired by the firm of Abernethy and Chapman. Prepare a step-by-step audit program for Reubens so that he can achieve these three audit objectives.