ADMS 4551 Lecture Notes - Lecture 1: American Institute Of Certified Public Accountants, Internet Privacy, Financial Institution
11 May 2018
School
Department
Course
Professor
1
4551 – Session 1 answer guide Effective date: Aug 20, 2014
Practice Problem 1
-
13, Audit of trucks, p. 20
1
-
13 a. The following parts of the definition of auditing are related to the
narrative:
(1) Virms is being asked to issue a report about qualitative and quantitative
information relating to trucks. The trucks are therefore the quantifiable information
with which the auditor is concerned.
(2) There are three criteria which must be evaluated and reported by Virms:
Existence of the trucks on the night of June 30, physical condition of each truck, and
fair market value of each truck.
(3) Susan Virms will accumulate and evaluate four basic types of evidence:
• Count the trucks to determine their existence.
• Use registration documents held by Charon for comparison to the serial number
on each truck to determine ownership.
• Examine the trucks to determine each truck’s physical condition.
• Examine the current blue book to determine the fair market value of each truck.
(4) Susan Virms, public accountant, appears qualified as a competent,
independent person. She is a public accountant, and she spends most of her time
auditing used automobile and truck dealerships and has extensive specialized
knowledge about used trucks that is consistent with the nature of the engagement.
(5) The report results are to include:
• which of the 20 trucks are parked in Regional’s parking lot the night of June 30
• the condition of each truck, using established guidelines
• the fair market value of each truck using the current blue book for
trucks
•
b. The only parts of the audit which will be difficult for Virms are:
• Evaluating the condition, using the guidelines of poor, good, and excellent. It is
highly subjective to do so. If she uses a different criterion than the blue book, the
fair market value will not be meaningful. Her experience will be essential in
using this guideline.
• Determining the fair market value, unless it is clearly defined in the blue book
for each condition.
Practice Problem 1
-
18, Professional judgment, p. 21
Discuss whether this situation provides an opportunity for Pas to address these
customer concerns.
The PA firm for the Internet company described in this problem could address these
customer concerns by performing a WebTrust attestation engagement. The
WebTrust assurance service was created by the profession to respond to the
growing need for assurance resulting from the growth of business transacted over
the Internet.
Relevant principles for each of the customer concerns noted in the problem are as
follows:
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
4551 session 1 answer guide effective date: aug 20, 2014. The following parts of the definition of auditing are related to the. Virms is being asked to issue a report about qualitative and quantitative. Practice problem 1- 13, audit of trucks, p. 20. 1- 13 a. narrative: (1) information relating to trucks. The trucks are therefore the quantifiable information with which the auditor is concerned. (2) Existence of the trucks on the night of june 30, physical condition of each truck, and fair market value of each truck. (3) There are three criteria which must be evaluated and reported by virms: Susan virms, public accountant, appears qualified as a competent, (4) independent person. She is a public accountant, and she spends most of her time auditing used automobile and truck dealerships and has extensive specialized knowledge about used trucks that is consistent with the nature of the engagement. (5)
