Essay about Financial Audit and Debt Obligations

Submitted By mclute

Words: 372

Pages: 2

Open Document

5.1 Review Questions
Michelle Clute

13-33. Relevant accounts when auditing debt obligations are:
Bonds Payable
Interest Expense
Gains or losses on refinancing debt
Notes Payable
Mortgages payable
The over all objective of the audit of debt obligations is to determine whether all obligations are recorded and properly classified and disclosed. The auditor is primarily concerned with understatement and, therefore, focuses on the completeness assertion.

13-34. Relevant accounts when auditing stockholder’s equity include:
Stock accounts (common, preferred, and treasury)
Additional paid-in capital
Dividends accounts
Retained earnings

13-41. Controls that the auditor would expect an organization to have in place in regards to debt obligations are:
1. The board of directors approves all new debt.
2. Debt and interest accounts are updated and reconciled to the general ledger on a monthly basis.
3. Top management and the board of directors review draft financial statements prior to issuance for proper disclosure of debt obligations.

13-42. Controls that the auditor would expect an organization to have in place in regards to stockholder’s equity are:
1. The board of directors approves all stock transactions (including options and warrants)
2. The CEO and CFO authorize all stock transactions (including options and warrants) approved by the board of directors.
3. Stockholder’s equity accounts are updated and reconciled to the general ledger on a timely basis.

13-50. Relevant Management Assertions and their typical Substantive Prodedures are as follows:
1. Management Assertion: Completeness (recorded debt obligations include all debt obligations).
Substantive Procedures: (a) Perform substantive analytical procedures, (b) Confirm debt obligations,

Care for Kids Essay

Lesson 8 – Planning the Audit Lecture 8.1 – Introduction to Planning the Audit Main Reasons for Planning an Audit enable the auditor to obtain sufficient appropriate evidence to help keep audit costs reasonable to avoid misunderstandings with the client (expectations of client, eliminate misunderstandings) Planning an Audit and Designing an Audit Approach 1. Accept client and perform initial audit planning – Acceptable Audit Risk 2. Understand the client’s business and industry – Inherent…

Words 2356 - Pages 10

FV review Essay

Class1: Over 40% of all audits inspected by the PCAOB in 2012 had deficiencies. FVM audit deficiencies continue to be significant, making up 24.6% of total deficiencies in 2012. There has been a significant shift in the causes of FVM deficiencies from financial instruments to business combinations. Prior to 2012, 86.9% of FVM deficiencies were caused by insufficient testing of financial instruments. In 2012, deficiencies relating to financial instrument dropped to 55.0% and those relating to business…

Words 1215 - Pages 5

Essay on financial statement auditing

Working Capital= Net working capital / total assets 2012 is 4,362,481/ 17,103,253=0.255067 2013 is 3,685,545/ 16,804959=0.219313 Profit Margin= net income/ sales 2012 is 1,101,572/3,950,602= 0.278836 2013 is 1,130,820/ 1,376,566= 0.821479 Debt to equity Ratio= total liabilities/ total stockholder equity 2012 is 2,497,650/ 14,605,603= 0.171006 2013 is 3,674,362/ 13,130,597= 0.279832 Asset Turnover Ratio= Sales / Average Total Assets 2012 is 3,950,602 / 1,951,668= 2.024218 2013…

Words 985 - Pages 4

Forensic Accounting Essay examples

fraud or misappropriation of assets and financial statement fraud (Pany and Whittington, 2002) First of all, a fraud differs from an error when the mistakes made where unintentional (error) and has no interest at all in committing them in disclosures within the financial statements. Whereas fraud, is the intentional conduct of committing omissions in the financial statement and this relates to the last (could be by misappropriation of assets or financial statements fraud) (Pany and Whittington…

Words 2043 - Pages 9

Essay on Balance Sheet and Pcl

it means that the group engagement partner need to send in a team. The partner will be responsible for the direction, supervision and performance of the group audit engagement. In order to satisfy this requirement once the competency and independency of the group engagement partner has been established, the partner need to create a group audit plan. In this plan, the partner need to put emphasis on the impairment test that need to be done on Guther Limited inventory and Intangible asset “Exclusive…

Words 971 - Pages 4

Essay Tokyo AEM

meet its short-term debt obligations. Investors often take a close look at liquidity ratios when performing fundamental analysis on a firm. Since a company that is consistently having trouble meeting its short-term debt is at a higher risk of bankruptcy, liquidity ratios are a good measure of whether a company will be able to comfortably continue as a going concern. Foe the Apple’s company 2012, current ration=current assets/current liabilities=57653/57854=0.99, Apple can pay debts due within one year…

Words 798 - Pages 4

Chicken: Auditor ' s Report and Financial Statements Essay

Management Assertions - the assertions by management about the accuracy of the financial statement components. An auditor typically uses these assertions to help guide the type of audit evidence gathered. These assertions are: Transactions - Occurrence - The occurrence assertion relates to whether all recorded transactions have occurred and pertain to the entity. For example, management asserts that all revenue transactions recorded during the period were valid transactions. Occurrence is sometimes…

Words 2681 - Pages 11

Essay on Mcdonald's Risk

risks for the conduct of the audit. Financing and market risk The Company generally borrows on a long-term basis and is exposed to the impact of interest rate changes and foreign currency fluctuations. Debt obligations at December 31, 2007 totaled $9.3 billion, compared with $8.4 billion at December 31, 2006. The net increase in 2007 was primarily due to net issuances of $573 million and the impact of changes in exchange rates on foreign currency denominated debt of $342 million, partly offset…

Words 1254 - Pages 6

Essay on General Mills Extra Credit Case

General Mills, Inc. Understanding Financial Statements Presented to: James White By: Nicholas Thebeau 8/7/2014 a) General Mills, Inc. primary business is focused on selling food products. The major products they sell are: cereals, frozen dough, baking products, snacks, yogurt, and organic foods, just to name a few. The company’s operations are international and include a presence in the USA, Canada, Europe, South America, Asia, and Pacific regions. The industry is saturated with…

Words 1325 - Pages 6

Corporation and Stock Price Essay

Chapter 1 The Financial Manager and the Firm Learning Objectives 1. Identify the key financial decisions facing the financial manager of any business firm. 2. Identify the basic forms of business organization used in the United States, and review their respective strengths and weaknesses. 3. Describe the typical organization of the financial function in a large corporation. 4. Explain why maximizing the current value of the firm’s stock price is the appropriate goal for management. 5. Discuss…

Words 7094 - Pages 29