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Question: Common Law Responsibility for Errors and Fraud. Huffman & Whitman (H&W), a large regional accounting firm, was engaged by Ritter Tire Wholesale Company to audit its financial statements for the year ended January 31. H&W had a busy audit engagement schedule from December 31 through April 1 and decided to audit Ritter's purchase vouchers and related cash disbursements on a sample basis. The firm instructed staff members to select a random sample of 130 purchase transactions and gave directions about important deviations, including missing receiving reports. Boyd, the assistant in charge, completed the audit documentation, properly documenting the fact that 13 of the purchases in the sample had been recorded and paid without including the receiving report (required by stated internal control procedures) in the file of supporting documents. Whitman, the partner in direct charge of the audit, showed the findings to Lock, Ritter's chief accountant. Lock appeared surprised but promised that the missing receiving reports would be inserted into the files before the audit was over. Whitman was satisfied, noted in the audit documentation that the problem had been solved, and did not say anything to Huffman about it. Unfortunately, H&W did not discover the fact that Lock was involved in a fraudulent scheme in which he diverted shipments of tires to a warehouse leased in his name and sent the invoices to Ritter for payment. He then sold the tires for his own profit. Internal auditors discovered the scheme during a study of slow-moving inventory items. Ritter's inventory was overstated by about $500,000 (20 percent), the amount Lock had diverted.
Required: a. Do you believe Huffman & Whitman has any further audit responsibility with respect to the missing receiving reports? Explain.
b. Do you believe Huffman & Whitman failed to exercise the appropriate level of professional care? Why or why not?
Amortization Payment. ABC Company agrees to pay a $50,000 loan in eight equal year-end payments. The interest rate is 12 percent. - What is the annual payment and what is the total interest on the loan?
The stockholders' equity section of Kay Corporation at the end of thecurrent year showed: Calculate the dollar amount to be reported as the preferred stock account balance.
Perform the required journal entries
during january 2012 wells inc. acquired 30 of the outstanding common stock of wilton co. for 1400000. this investment
Determine the amount of underapplied or overapplied manufacturing overhead for the period.
The cumulative feature of preferred stock. limits the amount of cumulative dividends to the par value of the preferred stock.
nike 2011 2010 2009operating 1812000 3164000 1736000investing 1021000 1268000 798000financing 1972000 1061000 7340001.
Write journal entries for the following transactions that occurred at Woodside Company during the month of May and explain how each would be disclosed in Woodside's financial statements.
On September 30, Picture Perfect Physicians invested $100,000 in new medical equipment What is the new amount for assets, liabilities and equity
Based on the preceding information, what amount of total liabilities was reported in the consolidated balance sheet immediately after acquisition?
Analyze the debt-to-equity ratio of Harley-Davidson
If Ebbe, Inc. had $20,000 in beginning inventory, and sold goods costing $300,000, what is the ending inventory balance?
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