Ac410-01, Unit 6
1406 words 6 pagesUnit 6 Assignment
AC410-01, Unit 6
12–21. Nolan Manufacturing Company retains you on April 1 to perform an audit for the fiscal year ending June 30. During the month of May, you make extensive studies of internal control over inventories. All goods purchased pass through a receiving department under the direction of the chief purchasing agent. The duties of the receiving department are to unpack, count, and inspect the goods. The quantity received is compared with the quantity shown on the receiving department’s copy of the purchase order. If there is no discrepancy, the purchase order is stamped “OK—Receiving Dept.” and forwarded to the accounts payable section of the accounting …show more content…
Estimating the fair value of the franchise may alert changes which may affect the recoverability of property, plant, and equipment. An assumption may be based upon the adverse change in the physical condition of the asset or circumstantial changes which could include a significant decrease in the market value of the asset.
E. For the significant assumptions that you identified in (d), describe the types of evidence that you would expect to examine in order to support those assumptions. An auditor should consider whether the information gathered indicates that the assumptions are not reasonable. Furthermore, the prevention of unreported retired assets through the use of serialized work orders. Additionally, auditors should consider the processes used by management in developing the estimates and examine the appropriate internal and external data to support these significant assumptions.
13–34. The following are typical questions that might appear on an internal control questionnaire relating to plant and equipment:
1. Has a dollar minimum been established for expenditures to be capitalized?
2. Are subsidiary ledgers for plant and equipment regularly reconciled with general ledger controlling accounts?
A. State the purpose of each of the above controls. 1) The purpose of a dollar minimum being established for