This simulation presents an Analytical Procedures/Risk Assessment Analysis document prepared by two members of your audit team relating to the Keystone Computers & Networks Incorporated (Keystone), audit. Background financial and other information on Keystone is included in Appendix 6C of Chapter 6. Parts 810 require information about accounting obtained in previous accounting and other courses. These topics are also addressed in subsequent chapters of this text (particularly Chapters 13 and 15). You are working on the audit of Keystone Computers & Networks Incorporated (Keystone), a calendar year-end nonissuer. The two associates assigned to the engagement provided a document with a number of observations relating to analytical procedures/risk assessment for the audit of year 5. Required: Your job as senior on the engagement is to review the various points made by the assistant, including consideration of the exhibits. For each of the sentences called out in the points on the document, determine if the current language is appropriate as is, should be removed altogether, or replaced with any of the provided alternatives. Links to each of the exhibits are provided in the document, but are available in the list below for convenience.

Return to questic 13 Lidl lle cilerillids policy of makiny no uepreciation entries reldeu lu dcquisitions of usposals uuring the year and we should consider the propriety of this policy. (Callout #8) Vouch invoices in support of the change in leasehold improvements. (Callout #9 The capital stock and paid-in capital accounts did not change during the year. We should obtain evidence that no changes in shareholders occurred during the year. (Callout #10) 0.88 points > Answer is complete but not entirely correct. Callouts 1. "indicates that the allowance for doubtful accounts seems adequate as of year-end and that no adjusting entry is necessary." Determination Replace with should be written off as of year-end with a debit to the allowance for doubtful accounts and a credit to accounts receivable and we should perform further procedures on the adequacy of the allowance for doubtful accounts Replace with "Line of credit." 2. "Cash-First National Bank." Replace with equal the most recent purchase price of the items x Delete the text. 3. "exceed current market values of the items." 4. "we should determine that all "slow moving" items are valued at zero." 5. "We should carefully inspect items for pledging status during the count of inventory." 6. "analyze the client's aging of receivables." Replace with "We should ask the president whether any inventory items are pledged." Replace with "vouch sales shortly after year-end." Replace with "add to client representations letter that he guarantees repayment of the loan according to its terms." 7. "vouch the cash disbursement." Replace with "We should inquire of the client as to details of this year's depreciation calculation and entry." 8. "It would seem that the client has a policy of making no depreciation entries related to acquisitions or disposals during the year and we should consider the propriety of this policy." 9. "Vouch invoices in support of the change in leasehold improvements. 10. "no changes in shareholders occurred during the year." Replace with "Consider the reasonableness of amortization of leasehold improvements during the year. Replace with "no stock was issued or repurchased by Keystone during the year." Return to questic 13 Lidl lle cilerillids policy of makiny no uepreciation entries reldeu lu dcquisitions of usposals uuring the year and we should consider the propriety of this policy. (Callout #8) Vouch invoices in support of the change in leasehold improvements. (Callout #9 The capital stock and paid-in capital accounts did not change during the year. We should obtain evidence that no changes in shareholders occurred during the year. (Callout #10) 0.88 points > Answer is complete but not entirely correct. Callouts 1. "indicates that the allowance for doubtful accounts seems adequate as of year-end and that no adjusting entry is necessary." Determination Replace with should be written off as of year-end with a debit to the allowance for doubtful accounts and a credit to accounts receivable and we should perform further procedures on the adequacy of the allowance for doubtful accounts Replace with "Line of credit." 2. "Cash-First National Bank." Replace with equal the most recent purchase price of the items x Delete the text. 3. "exceed current market values of the items." 4. "we should determine that all "slow moving" items are valued at zero." 5. "We should carefully inspect items for pledging status during the count of inventory." 6. "analyze the client's aging of receivables." Replace with "We should ask the president whether any inventory items are pledged." Replace with "vouch sales shortly after year-end." Replace with "add to client representations letter that he guarantees repayment of the loan according to its terms." 7. "vouch the cash disbursement." Replace with "We should inquire of the client as to details of this year's depreciation calculation and entry." 8. "It would seem that the client has a policy of making no depreciation entries related to acquisitions or disposals during the year and we should consider the propriety of this policy." 9. "Vouch invoices in support of the change in leasehold improvements. 10. "no changes in shareholders occurred during the year." Replace with "Consider the reasonableness of amortization of leasehold improvements during the year. Replace with "no stock was issued or repurchased by Keystone during the year