Auditing Cases An Interactive Learning Approach 7th Edition Mark S Beasley, Frank A. Buckless, Steven M. Glover, Douglas F Prawitt - Solutions

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The Jacksonville Jaguars National Football League (NFL) team is taking advantage of information technology (IT) tools in the sale of stadium snacks and souvenirs. At Alltel Stadium where the Jaguars play their home games, football fans can use Spot Cards to purchase soft drinks, beer, popcom, and
After being in business for only two years, Your1040.com has quickly become a leading provider of online income tax preparation and filing services for individual taxpayers. Steven Chicago founded the company after a business idea came to him while shopping for individual tax preparation software.
Brent Dorsey graduated eight months ago with a master's degree in accounting. After graduating, Brent began working with a large accounting firm in Portland. He is now on his second audit engagement a company called Northwest Steel Producers. Working day-to-day with Brent on the audit are two other
It was 9:30 A.m. on a Monday morning when the call came through. "Hi Dr. Mitchell, do you have a minute?""Sure," the professor replied."I am one of your former students, but if you don't mind, I would prefer to remain anonymous. I think it is best for both of us if I not reveal my name or company
In December 1995, the flamboyant entrepreneur Michael "Mickey" Monus, formerly president and chief operating officer (COO) of the deep-discount retail chain PharMor, Inc., was sentenced to 19 years and seven months in prison. Monus was convicted for the accounting fraud that inflated Phar-Mor's
Enron Corporation entered 2001 as the seventh largest public company in the United States only to later exit the year as the largest company to ever declare bankruptcy in U.S history. Although investigations into the company's demise will likely continue for years, reasons for Enron's collapse are
The Runners Shop (TRS) was a family-owned business founded 17 years ago by Robert and Andrea Johnson. In July of 2003, TRS found itself experiencing a severe cash shortage that forced it to file for bankruptcy protection. Prior to shutting down its operations, TRS was engaged in the retail sale of
Dell Computer Corporation (Dell) designs, develops, manufactures, markets, services, and supports a wide range of computer systems, including desktops, notebooks, workstations and network servers. ${ }^{1}$ The company also markets software, computer peripherals, and post-sale service and support
The accounting firm of Barnes and Fischer, LLP, is a medium-sized, national CPA firm. The partnership, formed in 1954, now has over 6000 professionals on the payroll. The firm mainly provides auditing and tax services, but it has recently had success in building the information-systems-consulting
All appeared well at Comptronix Corporation, a Guntersville, Alabama based electronics company, until word hit the streets November 25, 1992 that there had been a fraud. When reports surfaced that three of the company's top executives had inflated company earnings for the past three years, the
Flash Technologies, Inc. has recently engaged your firm to perform the annual audit for the year ending December 31, 2002. Flash has determined that their current auditors, Adams \& Adams LLP, cannot provide the international support that Flash now requires with their increased investment in
Tina is a manager in the Business Advisory and Assurance Services division of a national public accounting firm. She has been given the job of managing the audit of Simply Steam, Co., which provides industrial and domestic carpet steam-cleaning services. Simply Steam has never been audited. Thus,
Ted is a manager in the Business Advisory and Assurance Services division of a national public accounting firm. He has been given the job of managing the audit of Easy Clean, Co., which provides industrial and domestic carpet steam-cleaning services. Easy Clean has never been audited. Thus, Ted
One can only imagine the high expectations of investors when the board of directors of CUC International, Inc. and HFS, Inc. agreed to merge in May 1997 to form Cendant Corporation. The $\$ 14$ billion stock merger of HFS and CUC, considered a marriage of equals, united two large service
Waste Management, Inc.'s Form 10-K filed with the Securities and Exchange Commission (SEC) on March 28, 1997 described the company at that time as a leading international provider of waste management services. According to disclosures in the Form $10-\mathrm{K}$, the primary source of its
Xerox Corporation (Xerox), once a star in the technology sector of the economy, has been engulfed in an accounting scandal alleging that it was too aggressive in recognizing equipment revenue. ${ }^{1}$ The complaint filed by the Securities and Exchange Commission (SEC) alleges that Xerox used a
A longtime client, Matthew Franklin, recently entered into a new venture involving his ownership and operation of a small 18 -room motel and café located in an area of southern Utah heavily visited by tourists. He needs your advice.Matthew hired a young couple to run the motel and café on a
St. James Clothiers is a high-end clothing store located in a small Tennessee town. St. James only has one store, which is located in the shopping district by the town square. St. James enjoys the reputation of being the place to buy nice clothing in the local area. The store is in its twentieth
You are the new information technology (IT) audit specialist at the accounting firm of Townsend and Townsend, LLP. One of the audit partners, Harold Mobley, asked you to evaluate the effectiveness of general and application IT-related controls for a potential new audit client, Collins Harp
Ann Taylor Stores Corporation (Ann Taylor) is a leading national specialty retailer of better-quality women's apparel, shoes, and accessories sold primarily under the "Ann Taylor" and "Ann Taylor Loft" brand names. ${ }^{1}$ Ann Taylor is a highly recognized national brand that defines a distinct
Northwest Bank (NWB) has banking operations in 35 communities in the states of Washington, Oregon, and Idaho. Headquarters for the bank are in Walla Walla, Washington. NWB's loan portfolio consists primarily of agricultural loans, commercial loans, real estate loans, and loans to individuals.
Analytical procedures can be powerful tools in conducting an audit. They help the auditor understand a client's business, and they are useful in identifying potential risks and problem areas requiring greater substantive audit attention. If formulated carefully enough that they allow the auditor to
Burlington Bees, an independent, minor league baseball team, competes in the Northwest Coast League. The team finished in second place in 2002 with a 87-57 record. The Bees' 2002 cumulative season attendance of 434,348 spectators set a new record high for the team, up from 390,000 in 2001.Bank-loan
Henrico Retail, Inc., is a first year audit client The audit partner obtained this background information about the sales system after recently meeting with client personnel at the corporate office.Sales System Background InformationHenrico's sales system is IT-based with computerized cash
The Harley-Davidson Motor Company (Harley-Davidson) began nearly 100 years ago fulfilling a dream of 21 -year old William S. Harley and 20 -year old Arthur Davidson. In 1903, they made available to the public the first Harley-Davidson motorcycle, a bike built to be a racer. The factory in which
Southeast Shoe Distributor (SSD) is a closely-owned business that was founded ten years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men's, women's, and children's shoes to retail shoe stores located in small to midsize communities. The company's basic
Southeast Shoe Distributor (SSD) is a closely-owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men's, women's, and children's shoes to retail shoe stores located in smallto mid-size communities. The company's basic
Southeast Shoe Distributor (SSD) is a closely-owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men's, women's, and children's shoes to retail shoe stores located in smallto mid-size communities. The company's basic
Southeast Shoe Distributor (SSD) is a closely-owned business founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and resells men's, women's, and children's shoes to retail shoe stores located in small to midsize communities. The company's basic strategy is
Southeast Shoe Distributor (SSD) is a closely-owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and resells men's, women's, and children's shoes to retail shoe stores located in small to midsize communities. The company's basic
The information below relates to the audit of EyeMax Corporation, a client with a calendar year-end. EyeMax has debt agreements associated with publicly traded bonds that require audited financial statements. The company is currently, and historically has been, in compliance with the covenants in
Auto Parts, Inc. ("the Company") manufactures automobile subassemblies marketed primarily to the "big three" U.S. automakers. The publicly-held Company's unaudited financial statements for the year-ended December 31, 2003, reflect total assets of $\$ 56$ million, total revenues of approximately
Spencer and Loveland LLP, is a medium-sized, regional accounting firm based in the western part of the United States. A new client of the firm, K\&K, Inc., which manufactures a variety of picture frames, recently contracted with Spencer and Loveland to perform an audit of the company's financial
Mark glanced up at the clock on his office wall. It read 2:30 P.M. He had scheduled a 3:00 P.M. meeting with George "Hang-ten" Baldwin, chief executive officer of Surfer Dude Duds, Inc. Surfer Dude specialized in selling clothing and accessories popularized by the California "surfer" culture. Mark
Murchison Technologies, Inc. recently developed a patient-billing software system that they market to physicians and dentists. Jim Archer and Janice Johnson founded the company in Austin, Texas five years ago after working at IBM for more than 15 years. Jim worked as a software programmer and
Congratulations!!! You were recently promoted to manager within your firm. Your strong work ethic and, of course, your excellent college training have propelled your career to new heights. One of the challenges of your new role is that you are now held accountable for finding new business
In an effort to develop a more precise (i.e., higher quality) expectation, you asked an associate to collect more detailed information, which is provided below. The quarterly rates are comparable to those reported in a Washington State Bank Commission publication. The quarterly loan volumes have
Henrico's sales system is IT-based with computerized cash registers on the floors of all of its stores. At the point of sale, Henrico's sales clerks scan the bar code on the price tag of the product being sold to read the product number. If the quantity of a product being sold exceeds one, sales
Henrico Retail, Inc. is a first year audit client. The audit partner obtained the following description of the sales system after recently meeting with client personnel at the corporate office.DESCRIPTION OF THE SALES SYSTEM Henrico’s sales system is IT-based with computerized cash registers on
You couldn’t be more excited about being on your first financial statement audit as you launch into your new professional accounting career. Having recently graduated with a Master of Accountancy degree, you are thrilled to be employing all the skills acquired in your rigorous accounting
Southeast Shoe Distributor (SSD) is a closely owned business that was founded ten years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men’s, women’s, and children’s shoes to retail shoe stores located in small to midsize communities. The company’s
Southeast Shoe Distributor (SSD) is a closely owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells mens, women’s, and children’s shoes to retail shoe stores located in small- to mid-size communities. The company’s basic
Southeast Shoe Distributor (SSD) is a closely owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and sells men’s, women’s, and children’s shoes to retail shoe stores located in small- to mid-size communities. The company’s
Southeast Shoe Distributor (SSD) is a closely owned business founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and resells men’s, women’s, and children’s shoes to retail shoe stores located in small to midsize communities. The company’s basic
Southeast Shoe Distributor (SSD) is a closely-owned business that was founded 10 years ago by Stewart Green and Paul Williams. SSD is a distributor that purchases and resells men’s, women’s, and children’s shoes to retail shoe stores located in small to midsize communities. The company’s
The Runners Shop (TRS) was a family-owned business founded 17 years ago by Robert and Andrea Johnson. In July of 2008, TRS found itself experiencing a severe cash shortage that forced it to file for bankruptcy protection. Prior to shutting down its operations, TRS was engaged in the retail sale of
Auto Parts, Inc. (‘'the Company”) manufactures automobile subassemblies marketed primarily to the “big three” U.S. automakers. The publicly held Company«’s unaudited financial statements for the year ended December 31, 2008, reflect total assets of $$56$ million, total revenues of
Mark glanced up at the clock on his office wall. It read 2:30 P.M. He had scheduled a 3:00 P.M. meeting with George “Hang-ten” Baldwin, chief executive officer of Surfer Dude Duds, Inc. Surfer Dude specialized in selling clothing and accessories popularized by the California “surfer”
Murchison Technologies, Inc. recently developed a patient-billing software system that it markets to physicians and dentists. Jim Archer and Janice Johnson founded the company in Austin, Texas five years ago after working at IBM for more than 15 years. Jim worked as a software programmer and Janice
The accounting firm of Barnes and Fischer, LLP, is a medium-sized, national CPA firm. The partnership, formed in 1954, now has over 6,000 professionals on the payroll. The firm mainly provides auditing and tax services, but it has recently had success building the information-systems- consulting
Dell Computer Corporation (Dell) is a worldwide provider of products and services that enable customers to build information-technology and internet infrastructures. Dell offers a broad range of product categories, including desktop PCs, servers and networking products, storage, mobility products,
Flash Technologies, Inc. has recently engaged your firm to perform the annual audit for the year ending December 31, 2008. Flash has determined that its current auditors, Adams & Adams LLP, cannot provide the international support that Flash now requires with its increased investment in Korea
Asher Farms, Inc. is a fully-integrated poultry processing company engaged in the production, processing, marketing and distribution of fresh and frozen chicken products. Asher Farms sells ice pack, chill pack and frozen chicken, in whole, cut-up and boneless form to retailers, distributors, and
Nathan recently interviewed with one of the accounting firms in the city where he wants to live. The firm agreed to cover the expense of a rental car that he used to travel from his university to the firm’s office. The rental car agency required that Nathan pay for the car with his credit card
It was 9:30 A.M. on a Monday morning when the call came through. “Hi Dr. Mitchell, do you have a minute?”“Sure,” the professor replied.“I am one of your former students, but if you don t mind, I would prefer to remain anonymous. I think it is best for both of us if I not reveal my name or
Don’t ever tell yourself, “that won’t happen to me.” Just ask Cynthia Cooper, former Vice President of Internal Audit at WorldCom.Cynthia Cooper was a typical accounting student as an undergrad at Mississippi State University. Raised in Clinton, Mississippi, Cynthia was “the girl next
On November 15, 2004, the Securities and Exchange Commission (SEC) filed an enforcement action in the Northern Illinois U.S. District Court against Hollinger Inc., a Toronto-based company, and its former Chairman and CEO, Conrad Black, and the company’s former chief operating officer, David
Enron Corporation entered 2001 as the seventh largest public company in the United States only to later exit the year as the largest company to ever declare bankruptcy in U.S history. Investors who lost millions and lawmakers seeking to prevent similar reoccurrences were shocked by these
All appeared well at Comptronix Corporation; a Guntersville, Alabama based electronics company; until word hit the streets November 25, 1992 that there had been a fraud. When reports surfaced that three ofthe company’s top executives had inflated company earnings for the past three years, the
Waste Management, Inc.’s Form 10-K filed with the Securities and Exchange Commission (SEC) on March 28, 1997 described the company at that time as a leading international provider of waste management services. According to disclosures in the Form 10-K, the primary source of its business involved
Xerox Corporation (Xerox), once a star in the technology sector of the economy, found itself engulfed in an accounting scandal alleging that it was too aggressive in recognizing equipment revenue.1 The complaint filed by the Securities and Exchange Commission (SEC) alleged that Xerox used a variety
In December 1995, the flamboyant entrepreneur, Michael “Mickey” Monus, formerly president and chief operating officer (COO) of the deep-discount retail chain Phar-Mor, Inc., was sentenced to 19 years and seven months in prison. Monus was convicted for the accounting fraud that inflated
Ted is an audit manager with a national public accounting firm and one of his clients is Easy Clean, Co. Easy Clean provides industrial and domestic carpet steam-cleaning services. This is the first time Easy Clean has been audited. Thus, Ted does not have any prior-year audit files to review. Ted
An entrepreneur by the name of Matt Franklin recently entered into a new venture involving ownership and operation of a small, 18-room motel and cafe. The motel is located in a remote area of southern Utah. The area is popular for tourists, who come to hike and mountain bike through the area’s
You are the new information technology (IT) audit specialist at the accounting firm of Town send and Townsend, LLP. One of the audit partners, Harold Mobley, asked you to evaluate the effectiveness of general and application IT-related controls for a potential new audit client, Collins Harp
Section 404 of the Sarbanes- OxleyAct of2002 requires public companies to report on the effectiveness of their internal control over financial reporting. Section 404 also requires companies to hire an auditor to perform an “integrated audit” involving both a traditional financial statement
The Harley-Davidson Motor Company (Harley-Davidson) began over 100 years ago, fulfilling a dream of 21-year-old William S. Harley and 20-year-old Arthur Davidson. In 1903, they made available to the public the first Harley-Davidson motorcycle, a bike built to be a racer. The factory in which they
The Jacksonville Jaguars National Football League (NFL) team was one of the first major sporting organizations to take advantage of information technology (IT) tools in the sale of stadium snacks and souvenirs. Beginning in 1995, football fans at Alltel Stadium, where the Jaguars play their home
Analytical procedures can be powerful tools in conducting an audit. They help the auditor understand a client’s business and are useful in identifying potential risks and problem areas requiring greater substantive audit attention. If formulated carefully, they allow the auditor to arrive at a
Northwest Bank (NWB) has banking operations in 35 communities in the states of Washington, Oregon, and Idaho. Flea quarters for the bank are in Walla Walla, Washington. NWB’s loan portfolio consists primarily of agricultural loans, commercial loans, real estate loans, and loans to individuals.
Burlingham Bees, an independent, minor league baseball team, competes in the Northwest Coast League. The team finished in second place in 2008 with an 87-57 record. The Bees’ 2008 cumulative season attendance of 434,348 spectators a new record ‘high for the team, up more than 10% from the prior
One can only imagine the high expectations of investors when the boards of directors of CUC International, Inc. (CUC) and HFS, Inc. (HFS) agreed to merge in May 1997 to form Cendant Corporation. The $14 billion stock merger of HFS and CUC, considered a marriage of equals, united two large service
Banking regulators announced in early 2015 a greater focus on evaluating ethical culture as part of their regulatory examination of a bank’s health. In a February 2015 speech, Thomas Baxter, Executive Vice President and General Counsel at the Federal Reserve Bank of New York, announced that the
Xerox Corporation (Xerox), once a star in the technology sector of the economy, found itself engulfed in an accounting scandal alleging that it was too aggressive in recognizing equipment revenue.1 The complaint filed by the Securities and Exchange Commission (SEC) alleged that Xerox used a variety
All appeared well at Comptronix Corporation, a Guntersville, Alabama based electronics company, until word hit the streets November 25, 1992 that there had been a fraud. When reports surfaced that three of the company’s top executives had inflated company earnings for the past three years, the
Brent Dorsey graduated six months ago with a master’s degree in accounting. Immediately after graduation, Brent began working with a large accounting firm in Portland, Oregon. He is now on his second audit engagement—a company called Northwest Steel Producers. Working day to day with Brent on
Apple Inc. (Apple) is a worldwide provider of innovative technology products and services. Apple’s products and services include iPhone®, iPad®, Mac®, iPod®, Apple Watch®, Apple TV®, a portfolio of consumer and professional software applications, iOS, macOSTM, watchOS® and tvOSTM operating
After being in business for only two years, Your1040Return.com has quickly become a leading provider of online income tax preparation and filing services for individual taxpayers. Steven Chicago founded the company after a business idea came to him while shopping for individual tax preparation
In December 1995, the flamboyant entrepreneur, Michael “Mickey” Monus, formerly president and chief operating officer (COO) of the deep-discount retail chain Phar-Mor, Inc., was sentenced to 19 years and seven months in prison. Monus was convicted for the accounting fraud that inflated
“It was like riding a tiger, not knowing how to get off without being eaten,” according to Satyam Computer Services Limited (Satyam) former Chairman, B. Ramalinga Raju, soon after massive fraud involving the company’s financial statements was revealed. For over five years, Raju was at the top
John C. Koss started his first company, J.C. Koss Hospital Television Rental Company, in 1953, based in Milwaukee, Wisconsin, but John had greater ambitions. Eventually he partnered with Martin Lange, an engineer, and by 1958 the two had founded Koss Electronics, Inc. Their first product, the SP/3
St. James Clothiers is a high-end clothing store located in a small Tennessee town. St. James has only one store, which is located in the shopping district by the town square. St. James enjoys the reputation of being the place to buy nice clothing in the local area. The store is in its twentieth
On January 24, 2008, Société Générale, France’s second largest bank announced the largest trading loss in history, a staggering 4.9 billion Euro ($7.2 billion U.S.), which it blamed on a single rogue trader. The trader, Jérôme Kerviel, worked at what Société Générale considered a
Town and Country Hardware (T&CH) is a closely owned business founded six years ago by Caleb and Jasmine Wright. T&CH has retail hardware stores located at three lake communities along the Virginia and North Carolina border. T&CH sells products for home improvement and recreational
Anne Aylor, Inc. (Anne Aylor) is a leading national specialty retailer of high-quality women’s apparel, shoes, and accessories sold primarily under the “Anne Aylor” brand name. Anne Aylor is a highly recognized national brand that defines a distinct fashion point of view. Anne Aylor
Wally’s Billboard & Sign Supply, Inc. was founded four years ago by Walter Johnson. The company specializes in providing locations for sign and billboard advertising and has recently begun to enter the sign design market. After working several years in the marketing department of a large
Henrico Retail, Inc. is a first year audit client. The audit partner obtained the following description of the sales system after recently meeting with client personnel at the corporate office.REQUIRED You are the audit senior assigned to the audit of Henrico Retail Inc. The audit partner
Confirmations of accounts receivable play an important role in the accumulation of sufficient, appropriate audit evidence. One of the principal strengths of confirmations is that they provide evidence obtained directly from third-parties. Auditing Standards provide guidance to auditors on how and
As you prepare for a professional career, have you ever wondered what characteristics distinguish an exceptional professional from one who is just average? One key distinguishing feature is the ability to consistently make high-quality professional judgments. Professional judgment, which is the
The accounting firm of Barnes and Fischer, LLP, is a medium-sized, national CPA firm. The partnership, formed in 1954, now has over 4,000 professionals on the payroll. The firm mainly provides auditing and tax services, but it has recently had success building the information systems consulting
Tina is an audit manager with a national public accounting firm and one of her clients is Simply Steam, Co. Simply Steam provides industrial and domestic carpet steam-cleaning services. This is the first time Simply Steam has been audited. Thus, Tina does not have any prior-year audit files to
Ted is an audit manager with a national public accounting firm and one of his clients is Easy Clean, Co. Easy Clean provides industrial and domestic carpet steam-cleaning services. This is the first time Easy Clean has been audited. Thus, Ted does not have any prior-year audit files to review. Ted
The Financial Accounting Standard Board’s Accounting Standards Codification Topic 820, Fair Value Measurement, (ASC 820) provides a framework for measuring or estimating the fair value of certain assets and liabilities. It provides a hierarchy with three levels that are differentiated by the
Your audit firm, Garrett and Schulzke LLP, is engaged to perform the annual audit of Hooplah, Inc., for the year ending December 31, 2017. Hooplah is a privately-held company that sells electronics components to companies that manufacture various appliances. The company hires a public accounting
The Runners Shop (TRS) was a family-owned business founded 17 years ago by Robert and Andrea Johnson. In July of 2018, TRS found itself experiencing a severe cash shortage that forced it to file for bankruptcy protection. Prior to shutting down its operations, TRS was engaged in the retail sale of
The information below relates to the audit of EyeMax Corporation, a client with a calendar year-end. EyeMax has debt agreements associated with publicly traded bonds that require audited financial statements. The company is currently, and historically has been, in compliance with the covenants in
Spencer and Loveland, LLP is a medium-sized, regional accounting firm based in the western part of the United States. A new client of the firm, K&K, Inc., which manufactures a variety of picture frames, recently contracted with Spencer and Loveland to perform an audit of the company’s
A 2017 Gallup Poll1 survey regarding Americans’ concerns about environmental issues revealed the following:Given results of surveys like the one above, it shouldn’t be surprising that more and more business leaders are concerned with how their business is impacting the environment and
Murchison Technologies, Inc. recently developed a patient-billing software system that it markets to physicians and dentists. Jim Archer and Janice Johnson founded the company in Austin, Texas five years ago after working at IBM for more than 15 years. Jim worked as a software programmer and Janice

Auditing Cases An Interactive Learning Approach 7th Edition Mark S Beasley, Frank A. Buckless, Steven M. Glover, Douglas F Prawitt - Solutions

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