ACC 574 WEEK 8 DISCUSSION - 83730

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olufunmilola

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  • Posted on: Wed 31 Dec, 2014
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1) Audit Objectives" Please respond to the following: • Evaluate the inherit risk of employee access to funds and other assets, indicating how internal controls can minimize the risk. Explain your rationale. • Imagine you are the audit partner in charge of the field audit. Make recommendations for verifying that all checks sent by the customers have been appropriately deposited and recorded in the general ledger 2) • Access the impact of time lags between realizing and recognizing economic events in the purchase and payroll systems, indicating how any negative effects may be minimized. Provide support for your rationale. • From the e-Activity, assess the impact of the emerging issues identified by the PCAOB and determine the types of controls that could be implemented to mitigate those identified risks. Support your position. NOTE: MORE THAN ONE ANSWER POSTED FOR THE PRICE OF ONE CHOOSE ANY
Solution Description
  • Access the impact of time lags between realizing and recognizing economic events in the purchase and payroll systems, indicating how any negative effects may be minimized. Provide support for your rationale.

Payroll processing is a special expenditure system.  Generally speaking, payroll checks could be processed through the regular accounts payable and cash disbursements system, but processing payroll checks in this manner would have some drawbacks as follows:

 General expenditure procedures that apply to vendors do not apply to employees; 

Writing checks to employees requires special controls; and General expenditure procedures are designed to handle a relatively smooth flow of transactions.  

Since payroll systems do not run frequently, they are well suited to batch processing and sequential files.  

 

  • From the e-Activity, assess the impact of the emerging issues identified by the PCAOB and determine the types of controls that could be implemented to mitigate those identified risks. Support your position.

Top Issues for Audit Committees in 2014

The demands on audit committees are expanding. At the same time, their primary responsibility to oversee management’s activities, including financial reporting and compliance, remains fundamental to corporate governance. It can be challenging for audit committees to focus on their traditional core duties while staying up to date on emerging issues such as cybersecurity, proposed regulatory changes, and international developments. Following are several issues audit committees may wish to focus on in 2014 and questions to consider, excerpted from Deloitte’s November-December 2013 Audit Committee Brief.

Proposed Auditor’s Reporting Model

The PCAOB recently proposed auditing standards on the auditor’s reporting model and the auditor’s responsibility for other information in annual SEC filings. These standards, proposed in August 2013, could significantly change the external auditor’s report and necessitate expanded audit procedures.

The significant proposed changes include:

  • A new section in the auditor’s report on critical audit matters specific to the audit:
    ––Critical audit matters are defined as those matters the auditor addressed during the audit of the financial statements that (1) involved the most difficu
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