Posted: April 20th, 2022

This week’s discussion questions are related to two mini cases:

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This week’s discussion questions are related to two mini circumstances:

Case 1: Every year Susan Riley, president of Bargon Building, Inc., take a three-week trip to Hawaii and indicators a number of clean checks to pay main payments in the course of the interval wherein she is absent. Riley’s trip typically happens close to the top of Bargon’s fiscal reporting interval as a result of it’s a slack time for the development enterprise. Jack Morgan, head bookkeeper for the corporate, makes use of this observe to his benefit. He makes out a test to himself for the quantity of a big vendor’s bill and data it as a fee to the seller for the acquisition of provider. He holds the test for a number of weeks to be sure the auditors won’t study the canceled test. Shortly after the primary of the 12 months, Morgan resubmits the bill to Riley for fee approval and data the test within the money disbursements journal. At that time, he marks the bill as paid and information it with all different paid invoices. Morgan has been following this observe efficiently for a number of years and feels assured that he has developed a foolproof fraud.

Case 1 Questions

What’s the auditor’s accountability for locating this sort of fraud?

What deficiencies exist within the consumer’s inner controls?

What substantive audit procedures are doubtless to uncover the fraud?

Case 2: The auditor has all the time acquired cooperation from a selected consumer and has no cause to Question Assignment administration’s integrity. The controller has requested that the auditor inform her about which warehouse areas that the auditor will go to in the course of the upcoming stock rely. As well as, the controller has requested copies of the auditor’s observations on the bodily stock as a result of she needs to make it possible for a superb stock was taken. Ought to the auditor adjust to these requests? State your rationale, together with a discussion skepticism.

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The discussion questions for this week are primarily based on two mini circumstances:

Case 1: Susan Riley, president of Bargon Building, Inc., takes a three-week trip to Hawaii yearly and indicators a number of clean checks to pay main payments whereas she is away. Riley’s trip normally falls close to the top of Bargon’s fiscal reporting interval, when the development business is at its slowest. This is one thing that Jack Morgan, the corporate’s head bookkeeper, takes benefit of. He writes himself a test for the quantity of a big vendor’s bill and data it as a fee to the seller for the provider buy. He retains the test for a number of weeks to be sure the auditors do not have a look at it.

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