1. Fisher, Inc. is a large corporation that is regularly audited by a public accounting firm. Fisher, Inc. also maintains an internal auditing staff.
Which do you think matters more to Fisher's board of directors: internal or external auditing? Why do you think so? Which do you think matters more to Fisher's stockholders: internal or external auditing? Why do you think so?
2. The CEO of your company has asked you to help prepare for the upcoming company audit. One of the items the CEO has asked you to do is suggest a number of sources in which you could get information that would be needed to prepare the description of internal control in the audit working papers.
Prepare a memo that you will present to the CEO in which you do the following: Suggest the sources from which you can obtain information that would be needed to prepare the description of internal control in the audit working papers.
Explain what potential ethical and legal issues could be presented if these sources are not found.
Develop solutions for those issues.
3. Depending on the results of their tests of control, the auditors may restrict substitutive procedures. Discuss and contrast the following concepts: the planned assessment of control risk the revised assessment of the risk after tests of controls have been performed
4. It has come to the CEO's attention that Sally, a company salesperson, grants the rights to wholesalers to return unsold product. He asks you to discuss the following at the next board of directors meeting: In the system of internal control, are Sally's actions a significant deficiency or a material weakness? Explain your reasoning and rationale.
5. This is the first year that you have audited Hurst & Johnson Corporation. You discovered that the company is carrying its property, plant, and equipment at appraisal values and determines depreciation on the basis of these values. This is considered a very large scope-limitation, and you have not been able to form an opinion on the financial statements taken as a whole.
Discuss the ethical issues involved with this situation.
Explain how you should handle this situation.
Explain what type of report you should issue and why.