Acct 400

 Complete the homework assignment outlined below and save your file as "LastnameFirstinitial-ACCT400-1". 

Chapter 9, Problem 31

Chapter 9, Problem 32

Chapter 9, Problem 34

9-31 [LO 4, 5] You are a new staff auditor on Big Tuna Co. Your senior advises you that you are in charge of performing inquiry with management concerning long-term debt and should be ready with a list of questions for the interview. Prepare a list of at least five questions that you should ask management concerning the company’s long-term debt.

9-32 [LO 2] You have been asked to perform substantive testing of the receivables account for Ocie’s Manufacturing. You have been instructed to utilize sampling techniques. There are 3,000 customer accounts making up the balance. Of those 3,000 total accounts, 30 of them are for amounts over $20 million. Assume that you stratified the population and performed tests on the 30 large balances. You selected a sample of 30 from the remaining 2,970 balances, and found overstatements totaling $2 million.

Required:

(a) What is the known error of the portion of the account you sampled?

The known error for the account sampled is the $2 million dollar statement.

(b) Is there the possibility for any more misstatements? If so, how much?

Yes, there is possibilities for additional misstatements. The auditor will want to conduct more tests in order to determine the amount the statements are off by.

(c) What might you discuss with Ocie’s management about your findings?

If I had been the auditor I would definitely discuss the sampled accounts misstatement and let them know I would like to do more testing and they should go back through their financial statements to portray a more accurate amount.

9-34 [LO 6] Johnny is the other senior auditor on the Propel Aviation audit. He must plan the audit procedures, but his responsibility is for the liability, revenue, and expense accounts instead of assets. Johnny must first consider the relevant management assertions for each account. Then, he must determine which procedures will be most effective in testing the balances.

Required:

For each of the following items, list (1) the most important management assertions and (2) the most effective procedures to test the account:

(a) Current payables

(b) Long-term debt

(c) Revenues and expenses