There are four auditing problems, including one on the analytical procedures. Although there are regression calculations involved, that problem is largely interpretive. All problems require us to think more than calculate. Wewill not need to use a computer that can run macros. I will be able will only have until 1:30 PM to complete. Attached is the excel workbook

RENAME THIS WORKBOOK WITH YOUR FAMILY NAME, GIVEN NAME, AND CUNY ID (Example: hitzig neal 12345678) ANSWER ALL QUESTIONS SHOW ALL WORK FOR QUESTIONS REQUING COMPUTATIONS I will grade on completeness, correctness, and clarity of your submissions ENTER YOUR RESPONSES IN THE YELLOW AREAS IF YOU NEED EXTRA SPACE FOR ANY RESPONSE, ADD ROWS TO THE SPREADSHEET. UPLOAD AND SUBMIT YOUR SOLUTION WORKBOOK TO BLACKBOARD BY THE DUE TIME You will lose one point for every five minutes that your submission is late. EACH PROBLEM IS WORTH 10 POINTS. EXAM TOTALS 40 POINTS. 1. What is the purpose of a preventive control? [1pt] Preventative controls are designed to keep errors or irregularities from occurring in the first place. 2. Give an example of a preventive control not involving separation of duties. [1pt] Like the museum example we did in class where we installed counting turnstiles and prenumbered sales tickets to ensure th Which woud improve verification and completeness. For the following questions, assume that the following procedures or controls are operating as intended. Choose the best response. Some are better than others, and will be graded accordingly. 3. In a sales/accounts receivable system the original customer purchase order is sent to billing. a. Describe an error or misstatement that this procedure helps to prevent. [2pts] b. Identify an assertion that your response to 3.a helps to achieve. [1pt] 4. In a well-controlled purchases/payable system, the receiving department would not be responsible for posting the transa a. Describe an error or misstatement that this helps to prevent.[2pts] b. Identify an assertion that your response to 4.a helps to achieve. [1pt] 5. In addition to separating custody, recording and authorization functions from each other, there are other pairs of duties th a. Identify one pair of such duties. [1pt] b. For the pair of duties you identified in 5.a, describe briefly the error or irregularity it can prevent or detect. [1pt] ccurring in the first place. They are built into internal control systems. bered sales tickets to ensure that no one is skimming money from the sales of museum tickets. sponsible for posting the transactions to the inventory records. here are other pairs of duties that should be separated. revent or detect. [1pt] I. You are planning to select a simple random sample in ordery to test the accuracy of the recorded amounts. The sample size has been determined in advance due to budgetary constraints. The following information is given: The standard error of the estimated misstatement is $600,000. The maximum tolerable misstatement [materiality] is $1,000,000. I. Determine a combination of a and b that will satisfy the given information. [3pts] [Notes: This problem has more than one valid answer. It is not necessary to know the sample size] II. Independent of your answer to I, you have selected a simple random sample of inventory items in order to The following is given: The confidence level is 99%, 2-sided. The estimated misstatement [the projection] is $1,100,000. The standard error of the estimated misstatement is $600,000. The maximum tolerable misstatement [materiality] is $1,000,000. a. Sketch the results and state your conclusion[s] based on the above facts. [3 pts] b. Your firm's policies require that all confidence intervals must be small enough to produce a materially corre Calculate the 2-sided confidence level that will enable you to make a materially correct decision regarding m f the recorded amounts. ventory items in order to test the accuracy of the recorded quantities. Your evaluation used the normal distribution to calculate the c roduce a materially correct adjusting journal entry. rrect decision regarding misstatement in the inventory. [4 pts] ribution to calculate the confidence interval. Your client, a reseller of electronic gadgets that it acquires in company liquidations, has inventory that may be salable only at prices below its cost. The client has already recognized a provision and allowance fo $500,000. The maximum tolerable misstatement [M] is $800,000. You performed a test of the client's inventory for adequacy of its provision and allowance for obsolescence. You selected and evalusted a monetary unit sample of inventory items. The statistical evaluation of the amount of obselescent inventory is given below. The client agrees with your findings REQUIRED: Based on the MUS results, draw an appropriate conclusion and recommendation (including journal [Your response should be clear, concise and complete.] [10pts] ance for obsolescence. ndation (including journal entry) regarding the adequact of the client's provision and allowance. You are performing preliminary analytical procedures on your client's inventory acquisitions [purchases] You have gathered and analyzed the data that are presented below. 20x1 Cost of Sales - COS Purchases - PURCH Sales Revenue - REV 88 100 180 20x2 101 105 195 Inventory @ beginning of year - INVb Inventory @ end of year - INVe 102 114 114 118 20x1 0.489 0.772 0.877 0.880 20x2 0.518 0.856 0.890 0.962 C0S/REV COS/INVe PURCH/INVe COS/PURCH 20x3 103 120 205 118 125 20X3 20x3 INDICATOR F 0.502 F 0.824 F 0.960 F 0.858 i. What does the above ratio analysis suggest regarding purchases? Explain briefly but clearly. ii. Assuming that Revenues can 'explain' Purchases, estimate purchases for 20x3 by regression analysis. with a 50% interval [25% 1-side risk, t=1] REV PURCH 20x1 180 100 20x2 195 105 20x3 205 120 iii. What do the regression results indicate about Purchases? acquisitions [purchases] TOLERABLE INTERVAL AVG 101.501 87.117 76.338 64.640 fly but clearly. by regression analysis. S 0.021 0.059 0.009 0.058 LOWER 101.480 87.057 76.329 64.582 UPPER 101.521 87.176 76.347 64.698