The PCAOB's standard No. 2 specifically requires auditors to understand transaction flows in designing their test of controls. What steps does this entail?
This involves:
1 . Selecting the financial accounts that have material implications for financial reporting.
2 . Identify the application controls related to those accounts. 3 . Identify the general that support the application controls.
The sum of these controls, both application and general, constitute the relevant internal controls over financial reporting that need to be reviewed.
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Indicate whether the statement is true or false
Your manager just assigned you to direct a team on an important project. Excited about your assignment, you immediately start making changes and assigning tasks. The team is unhappy with the changes to their task assignments. Because of the conflict you are forced to either work extra hours to complete the project or accept failure and notify your manager. Based on the case above, should you work the extra hours, accept failure, or regroup with your team?
What will be an ideal response?
Andrew Durham was injured in a job-related accident that resulted in a workers' compensation settlement agreement with the employer's insurance carrier, Traveler's Indemnity Company. The settlement agreement required Traveler's to pay Durham $2,500 per month for the rest of his life. To finance its obligation, Traveler's purchased an annuity in its name. The settlement agreement required Traveler's approval or written consent prior to an assignment of the annuity payments. Durham later decided to open a business and went to a credit union for a $214,000 loan. The credit union loaned the money, taking a security interest in Durham's monthly annuity payments. Traveler's consent was never secured. Discuss the conditions in which a right may not be assigned and assess if this was a valid
assignment. What will be an ideal response?
Under a plan of complete liquidation, Coast Corporation distributes land with a $300,000 adjusted basis and a $400,000 FMV to William, a 25% shareholder. William has a $200,000 basis in his Coast stock. The land is inventory in the hands of Coast Corporation. Coast Corporation must recognize
A. $100,000 of long-term capital gain. B. $100,000 of ordinary income. C. $200,000 of ordinary income. D. no gain.