POST ACC522 Unit 5 Assignment Latest 2018 October

ACC522 Advanced Audit Issues

Unit 5 Assignment 

Part 1

Case 5: Test of Controls: The Revenue and Cash Receipts Cycle

Instructions: Answer all the questions that appear below (and also in Exhibit 5-1) regarding accounts receivable control procedures. Use this case and Exhibits 4-4 and 4-5 to complete this questionnaire.

Case 5 - Exercise 1

Abernethy and Chapman

Internal Control Questionnaire - Accounts Receivable

Client: The Lakeside Company

Prepared by:

Date:

Part 2

Case 5: Test of Controls: The Revenue and Cash Receipts Cycle

Instructions: Exhibit 5-2 is a portion of the audit program that Mitchell designed to test the operating efficiency of controls in the revenue and cash receipts cycle. For each individual test that appears in Exhibit 5-2, indicate the anticipated results if the control procedure is working properly. Also, if the control is not functioning properly, what potential problems exist? Indicate your responses in the table provided below.

Case 5 - Exercise 2

Abernethy and Chapman

Internal Control Evaluation

Client:

Prepared by:

Date:

Exhibit 5-2 is a portion of the audit program that Mitchell designed to test the operating efficiency of controls in the revenue and cash receipts cycle.  For each individual test, indicate the anticipated results if the control procedure is working properly.  Also, if the control is not functioning properly, list the potential problems that exist.  Use the following format for your response:

Part 3

Case 6: Audit Procedures and Audit Documentation: Testing the Inventory Purchasing System

Respond fully to the questions below:

1. What control activities are evident in Lakeside’s inventory procurement system? For each activity, indicate its purpose by reference to management assertions. From the auditor’s perspective, what is the significance of Lakeside acquiring virtually all merchandise from Cypress Products?

1. In the first set of testing procedures listed in this case, the auditor begins with canceled checks and then seeks supporting documentation. In the second, receiving reports are selected, and the recording of subsequent events is traced through the system. Which of the management assertions are being corroborated by each test? Why are the tests performed in these manners?

1. The case mentions some possible purchasing and payment problems. Given the company’s controls, is it possible that Lakeside might pay for goods that were never received? Is it possible that the company might fail to pay for inventory that has been received? Be specific with your answer, describing in detail the nature of the transaction that may result in the error.

1. What is the purpose of an audit document such as the example presented in Exhibit 6-1? Does the audit document belong to Lakeside or to Abernethy and Chapman? Why?