{"id":83982,"date":"2022-07-30T03:43:58","date_gmt":"2022-07-30T03:43:58","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/week-5-homework-questions-questions-1-and-2-were-taken-directly-from\/"},"modified":"2022-07-30T03:43:58","modified_gmt":"2022-07-30T03:43:58","slug":"week-5-homework-questions-questions-1-and-2-were-taken-directly-from","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/week-5-homework-questions-questions-1-and-2-were-taken-directly-from\/","title":{"rendered":"Week 5 homework questions questions 1 and 2 were taken directly from"},"content":{"rendered":"
\n

Week 5 Homework Questions<\/strong><\/p>\n

\u00a0<\/p>\n

Questions 1 and 2 were taken directly from the text and I am aware that the answers are available through an internet search.\u00a0 <\/span>I want to remind you that searching the internet for the answers and using those answers is a violation of UMUC academic integrity policies.\u00a0 <\/span>In addition, using any outside source without citation is plagiarism.\u00a0 <\/span>However, just gaining access to the answers will not satisfy the homework assignment because I have added the requirement that you explain your answers, which cannot be found on the internet and needs to be reasoned out from the material in the chapter.\u00a0 <\/span>In grading, I will place more emphasis you explanation than your selection of the correct alternative.<\/em><\/strong><\/p>\n

\u00a0<\/p>\n

1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The following are several multiple choice questions adapted from the CPA exam that cover the concept and application of materiality.\u00a0 <\/span>For each question, selected the best answer and then explain why it is better than all the alternatives.\u00a0 <\/span>Your explanations should address all the possible alternatives presented in the question.<\/p>\n

a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>Which one of the following statements is correct concerning the concept of materiality?<\/p>\n

i)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>Materiality is determined by reference to guidelines established by the AICPA.<\/p>\n

ii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>Materiality depends only on the dollar amount of an item relative to other items in the financial statements.<\/p>\n

iii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>Materiality depends on the nature of an item rather than the dollar amount.<\/p>\n

iv)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>Materiality is a matter of professional judgment.<\/p>\n

Answer:<\/strong>\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

Explanation<\/strong>:\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>In considering materiality for planning purposes, an auditor believes that misstatements aggregating $10,000 will have a material effect on an entity’s income statement, but that misstatements will have to aggregate $20,000 to materially affect the balance sheet. \u00a0<\/span>Ordinarily, it is appropriate to design audit procedures that are expected to detect misstatements that aggregate to<\/p>\n

i)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>$10,000<\/p>\n

ii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>$15,000<\/p>\n

iii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>$20,000<\/p>\n

iv)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>$30,000<\/p>\n

Answer:<\/strong>\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

Explanation<\/strong>:\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>A client decides not to record an auditor’s proposed adjustments that collectively are not material and wants the auditor to issue the report based on the unadjusted numbers. \u00a0<\/span>Which of the following statements is correct regarding the financial statement presentation?<\/p>\n

i)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The financial statements are free from material misstatement, and no disclosure is required in the notes to the financial statements.<\/p>\n

ii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The financial statements do not conform with generally accepted accounting principles (GAAP).<\/p>\n

iii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The financial statements contain unadjusted misstatements that should result in a qualified opinion.<\/p>\n

iv)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The financial statements are free from material misstatement, but disclosure of the proposed adjustment is required in the notes to the financial statements.<\/p>\n

Answer:<\/strong>\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

Explanation<\/strong>:\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The following are several multiple choice questions adapted from the CPA exam that cover audit risk.\u00a0 <\/span>For each question, selected the best answer and then explain why it is better than all the alternatives.\u00a0 <\/span>Your explanations should address all the possible alternatives presented in the question.<\/p>\n

a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>Some account balances, such as those for pensions and leases, are the result of complex calculations. The susceptibility to material misstatements in these types of accounts is defined as<\/p>\n

i)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>audit risk.<\/p>\n

ii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>detection risk.<\/p>\n

iii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>inherent risk.<\/p>\n

iv)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>sampling risk.<\/p>\n

\u00a0<\/p>\n

Answer:<\/strong>\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

Explanation<\/strong>:\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>As the acceptable level of detection risk decreases, the auditor may do one or more of the following except change the<\/p>\n

i)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>nature of audit procedures to more effective procedures.<\/p>\n

ii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>timing of audit procedures, by perhaps performing them at year-end rather than an interim date.<\/p>\n

iii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>extent of audit procedures, by perhaps using larger sample sizes.<\/p>\n

iv)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>assurances provided by audit procedures to a lower level.<\/p>\n

\u00a0<\/p>\n

Answer:<\/strong>\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

Explanation<\/strong>:\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

\u00a0<\/p>\n

c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>Inherent risk and control risk differ from planned detection risk in that they<\/p>\n

i)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>arise from the misapplication of auditing procedures.<\/p>\n

ii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>may be assessed in either quantitative or qualitative terms.<\/p>\n

iii)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>exist independently of the financial statement audit.<\/p>\n

iv)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>can be changed at the auditor’s discretion<\/p>\n

\u00a0<\/p>\n

Answer:<\/strong>\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n

Explanation<\/strong>:\u00a0 <\/span><\/p>\n

\u00a0<\/p>\n<\/div>\n

\n

\u00a0<\/p>\n

3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>For each of the following independent scenarios, state the effect, if any, on each component of the audit risk model and explain why you made each selection.\u00a0 <\/span>For your answer to the effect portion of the question, select from I = increase, D = decrease, or N = no effect.\u00a0 <\/span>I have included a table for each scenario to help you organize your answers and be complete.\u00a0 <\/span>This question was adapted from the text, but I have altered it to require explanations.\u00a0 <\/span>Also, I disagree with the text solutions manual on some of them but since the solutions manual doesn’t provide an explanation of their answers, I cannot determine how the authors arrived at their conclusions.\u00a0 <\/span>I will be grading based on my answers.\u00a0 <\/span>As I reminder, attempting to access the solutions manual to answer these questions is a violation of academic integrity.\u00a0 <\/span><\/em><\/strong><\/p>\n

a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>In discussions with management, you conclude that management is planning to sell the business in the next few months.\u00a0 <\/span>Consequently several key accounting personnel have recently quit.\u00a0 <\/span>In addition, the firm’s gross profit margin has significantly increased since last year.<\/p>\n\n\n\n\n\n\n\n
\n

Risk Model Component<\/span><\/strong><\/p>\n<\/td>\n

\n

Effect<\/span><\/strong><\/p>\n

(I, D, N)<\/span><\/strong><\/p>\n<\/td>\n

\n

Explanation<\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

AAR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

IR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

CR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

PDR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The client began selling products online to customers through its web page during the year under audit.\u00a0 <\/span>The online ordering process has not been integrated with the firm’s accounting system.\u00a0 <\/span>The firm’s sales staff print out online orders and manually enter the information into the firms accounting system.\u00a0 <\/span><\/p>\n\n\n\n\n\n\n\n
\n

Risk Model Component<\/span><\/strong><\/p>\n<\/td>\n

\n

Effect<\/span><\/strong><\/p>\n

(I, D, N)<\/span><\/strong><\/p>\n<\/td>\n

\n

Explanation<\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

AAR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

IR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

CR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

PDR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

c)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>An account balance increased by a material amount from last year without any explanation.<\/p>\n\n\n\n\n\n\n\n
\n

Risk Model Component<\/span><\/strong><\/p>\n<\/td>\n

\n

Effect<\/span><\/strong><\/p>\n

(I, D, N)<\/span><\/strong><\/p>\n<\/td>\n

\n

Explanation<\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

AAR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

IR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

CR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

PDR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

d)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The firm’s management materially decreased long-term contractual debt from what is was last year.<\/p>\n\n\n\n\n\n\n\n
\n

Risk Model Component<\/span><\/strong><\/p>\n<\/td>\n

\n

Effect<\/span><\/strong><\/p>\n

(I, D, N)<\/span><\/strong><\/p>\n<\/td>\n

\n

Explanation<\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

AAR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

IR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

CR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

PDR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

e)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>This is the second year of the engagement and there were few misstatements found in the prior year’s audit.\u00a0 <\/span>Consequently, the auditor has decided to increase reliance on internal controls.<\/p>\n\n\n\n\n\n\n\n
\n

Risk Model Component<\/span><\/strong><\/p>\n<\/td>\n

\n

Effect<\/span><\/strong><\/p>\n

(I, D, N)<\/span><\/strong><\/p>\n<\/td>\n

\n

Explanation<\/span><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

AAR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

IR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

CR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n

\n

PDR<\/span><\/strong><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n

\n

\u00a0<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n<\/div>\n

\n

4)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>Read the following description of the Preview Company.\u00a0 <\/span><\/p>\n

Preview Company Case Description<\/em><\/strong><\/p>\n

\u00a0<\/em><\/strong><\/p>\n

Preview Company, a diversified manufacturer, has five divisions that operate throughout the United States and Mexico.\u00a0 <\/span>Preview has historically allowed its divisions to operate autonomously.\u00a0 <\/span>Corporate intervention occurred only when planned results were not obtained.\u00a0 <\/span>Corporate management has high integrity, but the board of directors and audit committee are not very active.\u00a0 <\/span>Preview has a policy of hiring competent people.\u00a0 <\/span>The company has a code of conduct, but there is little monitoring of compliance by employees.\u00a0 <\/span>Management is fairly conservative in terms of accounting principles and practices, but employee compensation packages depend highly on performance.\u00a0 <\/span>Preview Company does not have an internal audit department, and it relies on its external auditor to review the controls in each division.\u00a0 <\/span><\/span><\/p>\n

\u00a0<\/span><\/p>\n

Chip Harris is the general manager of the Fabricator Division.\u00a0 <\/span>The Fabricator Division produces a variety of standardized parts for small appliances.\u00a0 <\/span>Harris has been the general manager for the last seven years, and each year he has been able to improve the profitability of the division.\u00a0 <\/span>He is compensated based largely on the division’s profitability.\u00a0 <\/span>Much of the improvement in profitability has come through aggressive cost cutting, including a substantial reduction in control activities over inventory.\u00a0 <\/span><\/span><\/p>\n

\u00a0<\/span><\/p>\n

During the last year, a new competitor has entered Fabricator’s markets and has offered substantial price reductions in order to grab market share.\u00a0 <\/span>Harris has responded to the competitor’s actions by matching the price cuts in the hope of maintaining market share.\u00a0 <\/span>Harris is very concerned because he cannot see any other areas where costs can be reduced so that the division’s growth and profitability can be maintained.\u00a0 <\/span><\/span>If <\/span>profitability is not maintained, his salary and bonus will be reduced.\u00a0 <\/span><\/span><\/p>\n

\u00a0<\/span><\/p>\n

Harris has decided that one way to make the division more profitable is to manipulate inventory because it represents a large amount of the division’s balance sheet.\u00a0 <\/span>He also knows that controls over inventory are weak.\u00a0 <\/span>He views this inventory manipulation as a short-run solution to the profit decline due to the competitor’s price-cutting.\u00a0 <\/span>Harris is certain that once the competitor stops cutting prices or goes bankrupt, the misstatements in inventory can be corrected with little impact on the bottom line.\u00a0 <\/span><\/span><\/p>\n

\u00a0<\/p>\n

a)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The following table includes two columns.\u00a0 <\/span>Include a brief phrase or sentence in the first column that merely describes the strength or weakness.\u00a0 <\/span>In in second column, explain why each strength is a strength or why each weakness is weakness.\u00a0 <\/span>In addition, for each weakness you identify, suggest an improvement that would reduce that weakness.\u00a0 <\/span>Finally, include issues that affect financial reporting and not operational effectiveness.\u00a0 <\/span>While the overall definition of internal controls includes operational effectiveness, auditors primarily are concerned about the accuracy of the financial statements.\u00a0 <\/span>I have included one example for each category to help illustrate what I am looking for in your answers.<\/p>\n

\u00a0<\/p>\n\n\n\n\n\n\n\n\n
\n

Entity Level Controls<\/em><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Strength<\/strong><\/p>\n<\/td>\n

\n

Reason it is a strength<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

They hire competent people<\/span><\/p>\n<\/td>\n

\n

The key to any control environment is the quality of the personnel who carry out the control procedures.\u00a0 <\/span>Hiring competent people is the first step in insuring that the employees tasked with executing accounting functions as well as control activities will do a good job, which will reduce the risk of material misstatements.\u00a0 <\/span>However, it is only the first step in that competent employees also need the training and other resources, as well as an incentive, to perform their jobs well.\u00a0 <\/span>I listed this because the case mentions it.\u00a0 <\/span>I would need to verify that statement by actually reviewing the policies and procedures to confirm that it really is a strength.\u00a0 <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/p>\n<\/td>\n

\n

\u00a0<\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/p>\n<\/td>\n

\n

\u00a0<\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/p>\n<\/td>\n

\n

\u00a0<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n\n\n\n\n\n\n\n\n
\n

Entity Level Controls<\/em><\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Weakness<\/strong><\/p>\n<\/td>\n

\n

Reason it is a weakness\u00a0 <\/span>and suggested improvement<\/strong><\/p>\n<\/td>\n<\/tr>\n

\n

Divisions are autonomous<\/span><\/p>\n<\/td>\n

\n

The gives the division managers too much power, particularly because corporate management only intervenes if operating results are not met.\u00a0 <\/span>This gives managers more latitude to manipulate the accounting to keep within the corporation’s targets.\u00a0 <\/span>They should least establish period reviews of each division.\u00a0 <\/span>I would suggest quarterly, at least.\u00a0 <\/span><\/span><\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/p>\n<\/td>\n

\n

\u00a0<\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/p>\n<\/td>\n

\n

\u00a0<\/p>\n<\/td>\n<\/tr>\n

\n

\u00a0<\/p>\n<\/td>\n

\n

\u00a0<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/p>\n

b)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>What factors in Preview Company’s control environment led to and facilitated Harris’ manipulation of inventory?\u00a0 <\/span>Your answer here may include items you listed above, but you should relate the specifically to the inventory manipulation in the question.<\/p>\n

\u00a0<\/p>\n<\/div>\n

5)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 <\/span><\/span>The following table contains a list of internal controls.\u00a0 <\/span>For each internal control, identify the type(s) of specific control activity (or activities) to which it applies (such as proper authorization and adequate documents and records); identify the transaction-related audit objective(s) to which it applies; and explain your selection of audit objective.\u00a0 <\/span>This question was adapted from the text, but I have altered it to require explanations.\u00a0 <\/span>As I reminder, attempting to access the solutions manual to answer these questions is a violation of academic integrity.\u00a0 <\/span><\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Week 5 Homework Questions \u00a0 Questions 1 and 2 were taken directly from the text and I am aware that the answers are available through an internet search.\u00a0 I want to remind you that searching the internet for the answers and using those answers is a violation of UMUC academic integrity policies.\u00a0 In addition, using […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":["post-83982","post","type-post","status-publish","format-standard","hentry","category-education"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/83982","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=83982"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/83982\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=83982"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=83982"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=83982"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}