Audit Chapter 10 Hw

Zach Johnson

Chapter 10 Homework

1,11,14,21,42,44,51

1.) Understatement of cash can be a sign of fraud or weakness of internal control over cash.

Interception of cash receipts before any record is made.

Payment for materials not received.

Duplicate payments

Overpayments to employees or payments to fictitious employees.

Payments for personal expenditures of officers or related parties.

11.) Lapping refers to a deliberate withholding of cash receipt and hiding this with a subsequent entry.

14.) Compensating balance arrangement refers to the amount of money that is held as collateral with the bank or financial institution by the company for obtaining a loan. Auditor’s corroboration will be as follows: Compensation balance arrangements may be confirmed on a separate letter addressed to an official at the financial institution, usually the loan officer of the client who deals with the arrangements.

21.) The information to be considered by auditors during an inspection or review of transactions related to securities include:

* Name of the issuing company that issues the securities

* Face Value of the securities

* Serial Number of the securities

* Maturity Date of the Securities

* Rate of Interest and Dividend

* Inspection of all future interests and coupons as applicable

42.)

44.)-a.)

1.) Segregation of the recordkeeping and custody functions is made to avoid personnel from being able to change the records to hide the abstraction.

2.) Registration in the name of the company is designed to stop employees with custody of securities from using them as their own.

3.) Analysis of minutes may reveal unrecorded sales and purchase of securities or other securities as well as transactions that are not consistent with company policy.

b.)

1.) Segregation of duties assigned is tested by creating investigations as to which employees did what tasks throughout the year and noticing personnel carrying out those tasks.

2.)...