Questions and Answers of Auditing Cases An Interactive Learning Approach

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
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
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
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
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
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
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
Dell Computer Corporation (Dell) designs, develops, manufactures, markets, services, and supports a wide range of computer systems, including desktops, notebooks, workstations and network servers.
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
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
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,
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
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
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 $\$ 14$
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
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. \({
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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,
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,
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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,
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
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
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
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
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
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
“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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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