Chapter 9 and 10

Homework 5

Question 9-29

A. The following items are audit planning decisions requiring professional judgment:

* Preliminary judgment about materiality

* Control risk

* Risk of fraud

* Planned detection risk

* Acceptable audit risk

* Tolerable misstatement

* Inherent risk

B. The following items are audit conclusions resulting from application of audit procedures and requiring professional judgment:

* Estimated total misstatements in a segment

* Estimated of the combined misstatement

C. It is acceptable to change any items affecting audit planning decisions at any time when the audited has started

Question 10-35

1. a) Adequate separation of duties and proper authorization of transactions and activities

b) Recorded transactions exist

c) An invalid time card turned in by a current employee

d) An employee could be claiming more hours than they are supposed to

e) Make sure to see that the employees are present when they clock-in

2. a) Adequate documents and records

b) Transactions are recorded

c) A missing time card never could be recognized before the preparation

d) An employee would not be paid for a time period

e) Get a list of employees and to ensure each employee has received a paycheck for the time being audited

3. a) Proper authorization of transactions and activities

b) Recorded transactions exist

c) A payroll cannot be processed unless there is a valid employee number

d) A made up payroll could be processed for a fictitious employee only if invalid employee numbers are in the employee master file

e) Test data transactions with invalid employee numbers in the data and payroll system to determine invalid transactions are automatically denied by the system

4. a) Adequate documents and records

b) Existing transactions are recorded

c) Prepare of a check for an unauthorized person and recording of the check in the journal as a voided check

d) An employee who...