[jeff]

Post by Another71.

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[Anonymous]

B is correct.

Comparing the control amounts posted to the accounts receivable ledger with the control totals of invoices is the best procedure for preventing or detecting the generation of an invoice for shipped goods which is recorded in the sales journal, but is not posted to any customer account.

The control amount for the accounts receivable ledger would be less than the control total of invoices if the sale were not posted to the customer's account. This is an example of an independent check being used as a control.

@rachel525 – Auditor's do not have the responsibility to detect fraud. However, if fraud is detected it should be reported to the appropriate level. This is just my opinion but if an auditor were to detect fraud and not report the instance it would probably be unethical. I wish there were a comparable AL resource such as the FASB ASC to easily research such questions but I do not have that ability at the moment. I will probably check out that link Rugger posted earlier on this page about access to the AL provided by the AICPA.

[rachel525]

Hey @AR

Yeah I did a MCQ in Wiley earlier and it says that disclosure of fraud to parties other than a client's senior management and its audit committee or board of directors ordinarily is not part of auditor's responsibility. However, there are some exceptions: auditors have a duty to disclose fraud to the SEC, successor auditor and the government funding agency

I just requested permission to access the AL a couple days ago.. here's the link: https://www.aicpa.org/BecomeACPA/CPAExam/ForCandidates/HowToPrepare/Pages/literature.aspx

[wongl0786]

@ARCPA2B, i would go along with answer B. The question mention that the invoices are prepared, so there is no problem with the invoice. But with the invoice being prepared, it means Dr. account receivable (AR) and Cr sales. Account receivable has to tie with sales. Answer B said, control amount of AR compared with control amount of sales. Eg. when the total amount of invoice amounted to $100, then, the total amount of all the account receivable has to amounted to $100. If total amount of AR is $95, then, $5 is not posted to AR.

Choice A : shipping documents are compared with sales invoices when ship. The question is not concerned with not preparing the sales invoices. It concern with not posting to AR.

Choice C : shipping clerk compared good received from warehouse with approved sales order. The question is not concerned with goods received. It does not mention good received.

Choice D : Daily sales summary compared with the total amount of invoices. This answer choice explain total sales with invoices but has nothing to do with AR.

[Anonymous]

This question was posted earlier and the correct answer given was A, which I can understand. What I don't get is why C would not also be correct.

Financial statements are considered special-purpose financial statements when:

A. prepared in accordance with either a regulatory or contractual basis of accounting.

B. restricted as to use.

C. prepared in accordance with either a contractual or an other comprehensive basis of accounting.

D. prepared on a pro forma basis designed to demonstrate the effects of hypothetical transactions.

[Anonymous]

@CTM – That's a really good question, I wondered the same thing and really can't find a good explanation. From what I can tell an “OCBOA” is a synonym for special purpose framework. This is a Ninja question which does not usually present an explanation for incorrect answers though so I can't really give you anything concrete.

[rachel525]

An auditor's tests of controls over the issuance of raw materials to production would most likely include:

A.

reconciling raw materials and work-in-process perpetual inventory records to general ledger balances.

B.

inquiring of the custodian about the procedures followed when defective materials are received from vendors.

C.

observing that raw materials are stored in secure areas and that storeroom security is supervised by a responsible individual.

D.

examining material requisitions and re-performing client controls designed to process and record issuance

[jasbeerch]

d

[Martin]

Is it D?

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[Martin]

The answer to the below question is C, so you guys were right. But Why C? I thought that lack of consistency because of change of gaap that is significant merits a qualify opinion? So If is qualify, you will mention it on the opinion and before it.

In which of the following should an auditor's report refer to the lack of consistency when there is a change in accounting principle that is significant?

A.

The scope paragraph

B.

The opinion paragraph

C.

An other-matter paragraph following the opinion paragraph

D.

An other-matter paragraph before the opinion paragraph

Through God all things can happen!

“You never fail until you stop trying.”
― Albert Einstein
When I was young, I used to admire intelligent people;as I grow older, I admire kind people.
“Just keep swimming, just keep swimming.”

FAR= 72-84
Audit= 73-82
BEC= 74-75
Reg=77

[rachel525]

Yes it is D.

Material requisitions are received by the store's department for the purpose of issuing such materials to production. Thus, examining material requisitions and then re-performing client controls designed to process and record issuance is the best method to test controls.

[rachel525]

An auditor is performing substantive tests of pricing and extensions of perpetual inventory balances consisting of a large number of items. Past experience indicated numerous pricing and extension errors. Which of the following statistical sampling approaches is most appropriate?

A.

Unstratified mean-per-unit

Incorrect B.

Probability-proportional-to-size

C.

Stop-or-go

D.

Ratio estimation

How come it is not PPS? PPS automatically emphasizes larger items by stratifying the sample.

This is the explanation:

The correct answer is D.

Ratio estimation sampling is based on ratios between audited amounts and recorded amounts. This approach is most efficient when the ratio is not equal to one.

Since there are numerous errors in pricing and extensions in this case, ratio estimation would result in numerous usable results that would produce the most precise evaluation.

[rachel525]

@Martin: I don't know if you're using Becker, in the textbook, material inconsistency falls under the use of other-matter paragraph required.

[Anonymous]

@Martin, if the change is properly disclosed, justifiable, in agreement with the reporting framework and acceptable then you would not need to qualify the opinion. That said, my Becker material states that an emphasis-of-matter paragraph should be used.

@ARCPA2B, OCBOA includes regulatory basis of accounting so I think A and C are the same thing.

[Anonymous]

@rachel, it does say that a material inconsistency falls under other-material but on A!-29 it talks about a lack of consistency due to an acceptable change in accounting principal being requiring an emphasis-of-matter. Either way I would have gone with D being the “most” correct.

[jackaroe]

AU-C 708.08 – Emphasis of Matter paragraph – changes in accounting principles (provided the criteria listed by @CTM were met). In the EOM paragraph – a description of the change and provide a reference to the entity's disclosure.

[Author]

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