Assignment from Tex

Assignment From the Text

University of Phoenix

ACC/492

November 15, 2010

Assignment From the Text

Chapter 14-4

State two inherent risk factors that might motivate management to deliberately misstate revenues and receivables and two factors that might cause unintentional misstatements.

Two inherent risk factors are that might motivate management to deliberately misstate revenues and receivables (1) reported a higher working capital in order to qualify for a loan,(2) report a target set by the company to show its achievement. The two factors that might cause unintentional misstatements are (1) numerous errors that causes sales and sales adjustment to increase, and (2) misclassification of current and concurrent receivables may occur based on the amount owing.

Comprehensive Question 14-28(Controls over cash receipts processing at a church)

You have been asked by the board of trustees of a local church to review its accounting procedures. As a part of this review, you have prepared the following comments relating to the collections made at weekly services and recordkeeping for members’ contributions:

1. The church’s board of trustees has delegated responsibility for financial management and audit of the financial records to the finance committee. This group prepares the annual budget and approves major disbursements but is not involved in collections or recordkeeping. No audit has been considered necessary in recent years because the same trusted employee has kept church records and served as financial secretary for 15 years.

2. The collection at the weekly service is taken by a team of ushers. The head usher counts the collection in the church following each service. He then places the collection and a notation of the amount counted in the church safe. Next morning the financial secretary opens the safe and counts the collection again. She withholds about $100 to meet cash expenditures during the coming week and deposits the remainder of the collection...