Hack 1 Flashcards
What is the role of the CFO?
Safeguards company Assets
How does the CFO; Safeguard Assets?
By Signing and Distributing the Payroll Checks
What documentation should the Successor Auditor Review of the Predecessor?
Audit Documentation
What do sample tests of controls accomplish
They let the auditor know controls are operating effectively
Who should control the custody of cash and securities?
The Treasury Department
What is in the current file for Audit documentation
Copies of Financial Statements
What is in the Permanent File of Audit Documentation
Org Chart,
Bond and Note Indentures
Flowchart of Internal Controls
What should the permanent file have in it?
- Stock Options
- Articles of Incorporation
- Contracts between the Auditor and Client
- Analysis of capital Stock
What is the Engagement Quality Reviewer Do?
Evaluate Significant judgments made; and Related conclusions reached
What are the Qualifications for;
- The Engagement Reviewer?
Must be an associated person of a registered public accounting firm and may be from outside the firm
What does a Transfer in Transit look like?
Transfer Recorded in Books as of Balance sheet Date (E.g. Dec 30th) but
Not Recorded in Bank until after Balance Sheet date (E.g. January 2nd)
How would you identify Kiting?
By examining a schedule of bank transfers a few days before and after the balance sheet date
Why would you understate Sales and Receivables?
To avoid paying taxes
Think About It:
- I Lower my Sales …….Less Sales…..I Lower the Taxes I Pay….Less Taxes
How could I detect Lapping?
By confirming customer balances and tracing amounts received to duplicate deposit slips
What can I find out through review of a client’s sales cutoff?
Whether they inflated sales
E.g. Manipulation of Sales
