Auditing | Financial markets homework help

Problem 3.53 General Audit Procedures and Financial Statement Assertions. The eight general audit procedures produce evidence about the principal management assertions in financial statements.  However, some procedures are useful for producing evidence about certain assertions, and other procedures are useful for producing evidence about other assertions.  The assertion being audited can influence the auditors’ choice of procedures.


Opposite each general audit procedure, write the management assertions most usefully audited by using each procedure.



Audit Procedures

PCAOB Assertions

a. Inspection of records or documents(vouching)


b. Inspection of records or documents ( tracing)


c. Inspection of records or documents (scanning)


d. Inspection of tangible assets


e. Observation


f. Confirmation


g. Inquiry


h. Recalculation




j. Analytical procedures





Problem 4.61 Risk Assessment

This question consists of a number of items pertaining to an auditor’s risk analysis for a company.  Your task is to tell how each item affects overall audit risk-that is, the probability of issuing an unmodified audit report on materially misleading financial statements.

Bond, CPA, is considering audit risk at the financial statement level in planning the audit of Toxic Waste Disposal (TWD) Company’s financial statements for the year ended December 31, 2014. TWD is a privately owned company that contracts with municipal governments to remove environmental wastes.  Audit risk at the overall financial statement level is influenced by the risk of material misstatements, which may be indicated by a combination of factors related to management, the industry, and the company.


Based only on the following information, indicate whether each of the following factors (Items 1 through 15) would most likely increase overall audit risk, decrease overall audit risk, or have no effect on overall audit risk. Discuss your reasoning.


Company profile

1 This was the first year TWD operated at a profit since 2009 because the municipalities received increased federal and state funding for environmental purposes.

2 TWD’S board of directors is controlled by Mead, the majority stockholder, who also acts as the chief executive officer.

3 The internal auditor reports to the controller, and the controller reports to Mead.

4The accounting department has experienced a high rate of turnover of key personnel. 

5 TWD’s bank has a loan officer who meets regularly with TWD’s CEO and controller to monitor TWD’s financial performance.

6TWD’s employees are paid biweekly.

7Bond has audited TWD for five years.

Recent Developments

8 During 2014, TWD changed the method of preparing its financial statements from the cash basis to the accrual basis under generally accepted accounting principles.

9 During 2014, TWD sold one-half of its controlling interest in United Equipment Leasing (UEL) Co. TWD retained significant interest in UEL.

10 During 2014, the state dropped litigation filed against TWD in 2010 alleging that the company discharged pollutants into state waterways.  Loss contingency disclosures that TWD included in prior-years’ financial statements are being removed for the 2013 financial statements.

11 During December 2014, TWD signed a contract to lease disposal equipment from an entity owned by Mead’s parents.  This related-party transaction is not disclosed in TWD’s note to its 2014 financial statements.

12 During December 2014, TWD completed a barter transaction with a municipality. TWD removed waste from a municipally owned site and acquired title to another contaminated site at below-market price.  TWD intends to service this new site in 2015.

13 During December 2014, TWD increased its casualty insurance coverage on several pieces of sophisticated machinery from historical cost to replacement cost.

14 Inquiries about the substantial increase in revenue that TWD recorded in the fourth quarter of 2014 disclosed a new policy.  TWD guaranteed several municipalities that it would refund the federal and state funding paid to it if any municipality fails federal or state site cleanup inspection in 2015.


15 An initial public offering of TWD’s stock is planned for late 2015.

Calculate your paper price
Pages (550 words)
Approximate price: -

Why Choose Us

Quality Papers

We value our clients. For this reason, we ensure that each paper is written carefully as per the instructions provided by the client. Our editing team also checks all the papers to ensure that they have been completed as per the expectations.

Professional Academic Writers

Over the years, our Acme Homework has managed to secure the most qualified, reliable and experienced team of writers. The company has also ensured continued training and development of the team members to ensure that it keep up with the rising Academic Trends.

Affordable Prices

Our prices are fairly priced in such a way that ensures affordability. Additionally, you can get a free price quotation by clicking on the "Place Order" button.

On-Time delivery

We pay strict attention on deadlines. For this reason, we ensure that all papers are submitted earlier, even before the deadline indicated by the customer. For this reason, the client can go through the work and review everything.

100% Originality

At Essay USA, all papers are plagiarism-free as they are written from scratch. We have taken strict measures to ensure that there is no similarity on all papers and that citations are included as per the standards set.

Customer Support 24/7

Our support team is readily available to provide any guidance/help on our platform at any time of the day/night. Feel free to contact us via the Chat window or support email:

Try it now!

Calculate the price of your order

We'll send you the first draft for approval by at
Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

Essay USA has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.


Essay Writing Services

At Essay USA, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.


Admission and Business Papers

Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.


Editing and Proofreading

Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.


Technical papers

We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.