Acc491Week Three Homework

Week Three Textbook Assignment

James Patterson

ACC / 491

October 06, 2014

Alisa Dumond

Week Three Textbook Assignment

5-30 | (Assertions) In planning the audit of a client's financial statements, an auditor identified the following issues that need audit attention. 1. The allowance for doubtful accounts is fairly presented in amount.Balance Audit Objective - Valuation & Allocation 2. All accounts payable owed as of the balance sheet date are included in the financial statements.Balance Audit Objective - Completeness 3. All purchase returns recorded in the general ledger are valid.Transaction Audit Objective - Occurrence 4. There is a risk that purchases made in the last week of the month might be recorded in the following period.Transaction Audit Objective - Cutoff (Completeness) 5. The client may have factored accounts receivable.Disclosure Audit Objective - Occurrence and Rights and Obligations 6. The client has used special-purpose entities to finance a building. Neither the building nor the debt is included in the financial statements.Disclosure Audit Objective - Completeness 7. A retail client values its inventory using the retail method of accounting.Balance Audit Objective - Valuation & Allocation 8. A construction client uses the percentage of completion method for recognizing revenues.Transaction Audit Objective - Occurrence 9. A client has a defined benefit pension plan and does not have competent employees to write footnote disclosures. Disclosure Audit Objective - Classification and Understandability 10. A client acquired a subsidiary company and paid a high amount of goodwill when the stock market, and resulting values, were at all-time highs.Balance Audit Objective - Valuation & Allocation 11. A client financed the acquisition of assets using preferred stock that pays a 3 percent dividend and must be redeemed from the shareholders next year.Disclosure Audit Objective - Classification & Understandability |...