3. A violation of the code of ethics would most likely have occurred when a CPAa. Issued an unqualified opinion on the 2019 financial statements when feesfor 2018 audit are still unpaid.b. Purchased a bookkeeping firm's practice of monthly write-ups for a percent-age of fees received over a 3-year period.c. Made arrangements with a bank to collect notes issued by a client in paymentof his dues.d. Joined a firm made up of three non-CPA practitioners.4. A violation of the code of ethics would least likely have occurred when a CPA inpublic practicea. Referred life insurance assignments to the CPA’s spouse who is a lifeinsurance agent.b. Served simultaneously as a provincial board member and practice publicaccounting in the same province.c. Used a records retention agency to store the CPA's working papers andclient's records.d. Served as an expert witness in a damage suit and received compensationbased on the amount awarded to the plaintiff.

I am answering the first question as per bartleby guidelines. Please re-submit the remaining…

Answered: 3. A violation of the code of ethics…

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter9: Auditing The Revenue Cycle.

Section: Chapter Questions

Problem 37RQSC

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Similar questions

(a) Maxim Stewart is the partner in charge of the audit for a new client, Southern Southerland (SS). The client engaged Maxim's audit firm in November 2017, in preparation for the 2018 audit. From 30 January 2018 onwards, SS has consistently paid its suppliers late, well in excess of the suppliers' agreed credit terms. This has resulted in some suppliers demanding cash on delivery from SS. Maxim is also aware from his review of correspondence between SS and its bank that the company has been experiencing cash flow problems since 2016. Required: Identify any significant events or conditions that individually or collectively may cast significant doubt on SS's ability to continue as a going concern (290 - 320 words)
(a) What are the auditor's responsibilities for 'going concern assumptions’'? (b) Maxim Stewart is the partner in charge of the audit for a new client, Southern Southerland(SS). The client engaged Maxim's audit firm in November 2017, in preparation for the 2018audit. From 30 January 2018 onwards, SS has consistently paid its suppliers late, well in excessof the suppliers' agreed credit terms. This has resulted in some suppliers demanding cash ondelivery from SS. Maxim is also aware from his review of correspondence between SS and itsbank that the company has been experiencing cash flow problems since 2016. Required: Identify any significant events or conditions that individually or collectively may cast significant doubt on SS's ability to continue as a going concern.
You are appointed audit senior of Ponga & Co for the audit of Going Away Ltd, an appliancemanufacturer with its year end of 31 July 2019. The following are some of the notes inrespect of a meeting between Ponga and Going Away: 1) One of Going Away’s significant customer has stopped trading. This customer owes$0.7 m to Going Away with an unlikely chance of payment; however the balance isincluded within the financial statements extracts below. 2) The sales director has recently left Going Away and has yet to be replaced. 3) The monthly cash flow has shown a net cash outflow for the last two months of thefinancial year and is forecast as negative for the forthcoming financial year. As aresult of this, the company has been slow in paying its suppliers and some arethreatening legal action to recover the sums owing. 4) Due to its financial difficulties, Going Away missed a loan repayment and, as a resultof this breach in the loan covenants, the bank has asked that the loan of $4.8 be…
audit is scheduled to begin in one weck. With respcct to past duc audit fccs, Alma 1. Alma, CPA, had not been paid yet her prior year's audit fee. The current year', audit is scheduled to begin in one weck. With respect to past duc audit fccs, Alm should a. Perform the scheduled audit and allow the company to pay when cash flow difficulties are alleviated. b. Perform the scheduled audit only after arranging a definite payment schedule and securing notes signed by the company. C. Inform management that the past due audit fees may be considered a loan on which interest must be computed for financial statement purposes. d. Inform management that the past-due audit fees are considered an impairment of auditor's independence. 2. Without the consent of the client. a CPA should not disclose confidential information contained in working papers to a a, Court that has issued a valid subpoena. b. Disciplinary body created under state statute. c. Voluntary quality control review board. d. CPA firm…
Read the following scenario about Strang Corporation and identify the substantive procedures that the CPA (Elaine Stanley) should perform to determine whether lapping exists. Do not discuss deficiencies in the system of internal control. During the year, Strang Corporation began to encounter cash flow difficulties, and a cursory review by management revealed receivable collection problems. Strang’s management engaged Elaine Stan ley, CPA, to perform a special investigation. Stanley studied the billing and collection cycle and noted the following: The accounting department employs one bookkeeper who receives and opens all incoming mail. This bookkeeper is also responsible for depositing receipts, filing daily remittance advices, recording receipts in the cash receipts journal, and posting receipts in the individual customer accounts and the general ledger accounts. There are no cash sales. The bookkeeper prepares and controls the mailing of monthly statements to customers. The concentration of functions and the receivable collection problems caused Stanley to suspect that a systematic theft of customers’ payments through a delayed posting of remittances (lapping of accounts receivable) is present.
It is February 16, 2020, and you are auditing Davenport Corporation's financial statements for 2019 (which will be issued in March 2020). You read in the newspaper that Travis Corporation, a major customer of Davenport, is in financial difficulty. Included in Davenports accounts receivable is 50,000 (a material amount) owed to it by Travis. You approach Jim Davenport, president, with this information and suggest that a reduction of accounts receivable and recognition of a loss for 2019 might be appropriate. Jim replies, Why should we make an adjustment? Ted Travis, the president of Travis Corporation, is a friend of mine; he will find a way to pay us, one way or another. Furthermore, this occurred in 2020, so lets wait and see what happens; we can always make an adjustment later this year. Our 2019 income and year-end working capital are not that high; our creditors and shareholders wouldnt stand for lower amounts than they already are. Required: From financial reporting and ethical perspectives, prepare a response to Jim Davenport regarding this issue.
You are an audit manager in Smith & Co, a firm of Chartered Certified Accountants. You have recently been made responsible for reviewing invoices raised to clients and for monitoring your firm’s credit control procedures. Several matters came to light during your most recent review of client invoice files: Norman Co, a large private company, has not paid an invoice from Smith & Co dated 5 June 2007 for work in respect of the financial statement audit for the year ended 28 February 2007. A file note dated 30 November 2007 states that Norman Co is suffering poor cash flows and is unable to pay the balance. This is the only piece of information in the file you are reviewing relating to the invoice. You are aware that the final audit work for the year ended 28 February 2008, which has not yet been invoiced, is nearly complete and the audit report is due to be issued imminently. Wallace Co, a private company whose business is the manufacture of industrial machinery, has paid all…
The Assistant Manager of Ridley Corporation is seeking your advice as the accountant, in dealing with the accounting changes in the company for the year 2020. Prepare a report, indicating the appropriate accounting treatment for the following situations. In your report, indicate the type of accounting change (change in accounting policy or change in estimate) or correction of error and the appropriate accounting treatment (retrospective or prospective).1. It was found in May 2020 that warranty claims for 2019 sales have increased because of a defective component used in manufacturing. The extra costs amounted to $200,000 in excess of the 2019 warranty accrual. 2. In 2020, the company examined its entire policy relating to the depreciation of plant equipment. Plant equipment had normally been depreciated over a 15-year period, but recent experience has indicated that the company was using too short a period in its estimates and that the assets should be depreciated over a 20-year…
As one of the year-end audit procedures, the auditor instructed the client's personnel to prepare a confirmation request for a bank account that had been closed during the year. After the client's treasurer has signed the request, it was mailed by the assistant treasurer. What is the major flaw in this audit procedure? a. The confirmation request was signed by the treasurer. b. Sending the request was meaningless because the account was closed before the year end. c. The request was mailed by the assistant treasurer. d. The CPA did not sign the confirmation request before it was mailed.
3. In the audit of loans payable, which of the following audit procedure would be most likely performed to validate the existence assertion? Group of answer choices a. Review loan contracts b. Sending loan confirmations c. Vouching of subsequent payments of loans d. Performing analytical procedures 4. You are auditing the December 31, 2021, accounts payable balance of one of your firm’s divisions. The division controller’s office has provided you with a schedule listing the creditors and the amount owed to each at December 31, 2021. Which of the following audit procedures would be your best choice for determining that no individual account payable has been omitted from the schedule? Group of answer choices a. Send confirmation requests to a randomly selected sample of creditors listed on the schedule b. Examine support for selected 2022 payments to creditors, ascertaining that those relating to 2022 are not on the schedule. c. Send confirmation requests to creditors that…
27. An audit firm has been asked by a client to attend a meeting between the client and its bank where a new bank loan application is to be discussed. According to the Code of Professional Ethics for Accountants, what type of threat to objectivity will be created if the auditor attends this meeting? a. Self interest threat b. Intimidation threat c. None of the options d. Self review threat
9. The 2021 financial statement audit of OMG company began when the trial balance was received from management. You were assigned to audit the accounts payable of the entity. The schedule of liabilities to vendor showed that the company has only five suppliers which account for 90% of the total accounts payable balance. Thus, the audit team has decided to send confirmation letters to those vendors. Upon your further review, you have noted that the amounts provided in the schedule and the trial balance does not balance, but you have noted that the difference is below the materiality threshold. Considering the facts provided, which of the following statements is true? Group of answer choices a. Negative confirmation letters may be sent to the suppliers even if we did not rely on controls. b. Since the difference is below materiality, there is no need to change samples. c. The sampling technique used by the audit associate is invalid because it involves bias. d. There is a sampling…

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