(Download PDF) Auditing Canadian 7th Edition Smieliauskas Solutions Manual Full Chapter

Auditing Canadian 7th Edition
Smieliauskas Solutions Manual

Go to download the full and correct content document:
https://testbankfan.com/product/auditing-canadian-7th-edition-smieliauskas-solutions-
manual/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...
Auditing Canadian 7th Edition Smieliauskas Test Bank
https://testbankfan.com/product/auditing-canadian-7th-edition-
smieliauskas-test-bank/
Auditing An International Approach 8th Edition

Smieliauskas Solutions Manual
https://testbankfan.com/product/auditing-an-international-
approach-8th-edition-smieliauskas-solutions-manual/
Auditing an International Approach 6th Edition

Smieliauskas Test Bank
approach-6th-edition-smieliauskas-test-bank/
Auditing an International Approach 5th Edition

Auditing An International Approach 8th Edition
Auditing and Assurance Services 7th Edition Louwers

Solutions Manual
https://testbankfan.com/product/auditing-and-assurance-
services-7th-edition-louwers-solutions-manual/
Auditing A Practical Approach Canadian 2nd Edition

Moroney Solutions Manual
https://testbankfan.com/product/auditing-a-practical-approach-
canadian-2nd-edition-moroney-solutions-manual/
Auditing Cases An Interactive Learning Approach 7th

Edition Beasley Solutions Manual
https://testbankfan.com/product/auditing-cases-an-interactive-
learning-approach-7th-edition-beasley-solutions-manual/
Auditing and Assurance Services In Australia 7th

Edition Gay Solutions Manual
https://testbankfan.com/product/auditing-and-assurance-services-
in-australia-7th-edition-gay-solutions-manual/
CHAPTER 8
AUDIT EVIDENCE AND ASSURANCE
SOLUTIONS FOR REVIEW CHECKPOINTS
ESSENTIALS
8-1. Audit procedures provide evidence that can support reasonable assurance. The audit evidence obtained must be
persuasive enough for the auditor to reach a well-reasoned conclusion that the financial statements are not materially
misstated. Note also that the information the auditor uses as evidence must be independent of management, in order
provide assurance to third parties as explained in the discussion of the three-party accountability model in Chapter 1.
8-2. The concept of reasonable assurance in auditing essentially is based on logical argumentation, where assertions
are the claims to be proven and various forms of evidence are used to build an argument that could persuade someone
that the claims are evident. Recall the critical thinking process we looked at in Chapter 3 and note how it, too, is based
on logical argumentation.
8-3. Auditors’ six main types of evidence gathering techniques are:

 inspection
 observation
 confirmation
 reperformance/recalculation
 analysis
 enquiry
8-4. Audit procedures are used for four main purposes throughout the audit process: risk assessment procedures,
control testing, substantive evidence gathering, and analysis. As further explanation, note the following links to the
three main steps of the audit process. Generally risk assessment procedures are used in the first step of the audit
process, for understanding the business, its environment and risks to assess the risks of material misstatement. Control
tesing and substantive procedures are used in the second step as the auditor's responses to the assessed risks of
material misstatement. Analysis is always used in the risk assessment step and in the third step, for concluding and
forming an audit opinion. Analysis may also be used as a source of substantive evidence in the risk response step if the
analytical procedures are well defined and based on reliable data.
8-5. Risk assessment procedures mainly use the enquiry and analysis techniques. They give auditor useful evidence for
understanding and insight into the likelihood of material misstatements, but only provide indirect evidence about
whether the financial statements actually are misstated. Control tests mainly use enquiry, observation, inspection, and
reperformance techniques, and give relevant evidence about internal control effectiveness, i.e., whether
management’s internal control over financial reporting is being complied with so misstatements are less likely. Control
tests only give indirect evidence that the financial statements are not misstated, however.
8-6. Substantive procedures examine evidence about dollar amounts and details for specific assertions in financial
statement items and disclosures, so they can provide direct evidence about whether there are misstatements.
Substantive procedures mainly involve confirmation, inspection, reperformance/recalculation, and analysis if specific
data is used.
8-7. Analytical procedures include a broad variety range of activities that can provide indirect or direct evidence about
material misstatement and also can be used to corroborate other evidence, so they are widely used throughout all the
steps of the audit process.
Smieliauskas & Bewley, Auditing: An International Approach, 7th Edition Page 8-1
Solutions Manual © 2016, McGraw-Hill Education. All Rights Reserved.
8-8. Analytical procedures are used for attention directing purposes in the risk assessment step of the audit process,
and are used as an overall reasonability evaluation by the engagement partner at the final conclusion step of the audit,
before forming an opinion on fair presentation. They may also be used for substantive evidence in the second step of
the audit process, to respond to assessed risks.
8-9. Corroboration of evidence involves finding one or more different pieces of evidence that support the same
conclusion. Corroborating evidence increases the reliability of the other evidence auditors have obtained, so it is an
important aspect of obtaining reasonable assurance. Note that this is especially important for auditing because much of
the evidence available to auditors is not conclusive on its own. Finding corroborating evidence increases reliability and
provides more persuasive support for audit conclusions. Since analysis is often an effective source of corroborating
evidence, it is very useful thoroughout the audit engagement.
8-10. Reliability depends on the source and nature of the evidence. Generally, the source of the most reliable evidence
comes from the direct personal knowledge of the auditor, since he or she is not depending on anyone else's claims,
interpretations or calculations. The nature of the most reliable evidence is that is objective and/or quantifiable, so it will
tend be neutral and verifiable (i.e., many different people can check its accuracy and are likely to reach the same
conclusion). In contrast, evidence that is subjective is based on qualitative assessments or opinions, which can quite
easily be biased (i.e., if many different people checked it they likely would come up with different conclusions,
depending on their own personal opinions or biases). Note that in financial statement auditing, evidence that comes
from management's claims (also called 'representations' or 'assertions') is considered to have low reliability, especially if
it is subjective (e.g., management's estimate of a warranty provision or bad debt allowance) because management often
has incentives to bias the information. For example they may want to report the maximum profit, or keep their current
ratio high to meet a debt covenant.
8-11. Sufficiency of evidence means there is enough appropriate evidence so that most people would find it reasonable
to support the conclusion. Appropriateness means the evidence is relevant to the assertions and reliable enough to be
believable.
8-12. Relevance refers to the logical connection between the evidence and the assertion. Note the following as further
explanation. One way to think about the relevance of audit evidence would be to use hypothesis testing from your
statistics knowledge as a model. If the assertion, or claim, to be proven is the hypothesis, the evidence obtained should
allow the auditor to either refute or support the claim. For example, say the assertion is that the auditee company's
inventory exists, if the auditor physically inspects the inventory with his or her own eyes, that evidence is relevant to
support the claim. But if the assertion to be proven is that the company owns the inventory, that same evidence is not
relevant because it may be already sold or held on consignment. What evidence would be relevant to ownership? The
auditor could look at supplier invoices showing the company had purchased it, could make inquiries of management to
verify they own it, could check inventory movement reports and sales reports to verify that it was not sold as of year
end, and could also use the fact that he/she has seen it in the company's warehouse as corroborating evidence. Note
that this example illustrates that some assertions are more difficult to prove with evidence than others! For existence,
once piece of evidence was conclusive to confirm the assertion, the auditors personal knowledge obtained from physical
inspection of the inventory. But for ownership it took several less conclusive pieces of evidence to build up a convincing
case that the company does really own the inventory.
8-13. Sufficiency of evidence is a matter of auditor judgment. To make this judgment the auditor considers whether
there is enough appropriate evidence so that most people would reach the same the conclusion as the auditor has
reached.
8-14. In designing audit procedures, the nature of procedure refers to the evidence gathering technique it uses. To
develop audit programs, auditors need to ask: What evidence is needed to address the highest risk assertions? Why is
this evidence relevant to the assertion? And how can this evidence be obtained? Audit programs are the instructions
that audit team members who are assigned to work on the audit will follow.
8-15. Audit programs are lists of audit procedures to be performed for each area of the financial statement audit. They
instruct the audit team members on how to obtain the audit evidence required to support forming the audit opinion.
8-16. Audit documentation files are reviewed for quality and completeness by more senior audit staff. They ultimately
will be reviewed by the audit engagement partner who is responsible for deciding whether the audit evidence obtained
supports signing the audit opinion. Clear and careful documentation of the programs is important to ensure they will be
done well. GAAS require documentation of the planned procedures, and the findings and conclusions of the audit staff
to be retained in files.
8-17. An audit opinion requires sufficient appropriate independent evidence to be obtained to support the positive
assurance form of opinion. This requirement to obtain independent evidence makes the audit opinion the highest form
of assurance opinion among all other reports accountants give to third parties. Other reports that public accountants
can provide to third parties, such as review engagement reports (giving moderate assurance) or compilation reports
(giving no assurance), do not have the requirement that they be supported by sufficient appropriate independent audit
evidence.
TEXT
8-18 Six basic types of evidence and six general techniques to gather it: (1) inspection, (2) observation, (3) confirmation,
(4) recalculation/reperformance, (5) analysis, and (6) inquiry.
8-19 External authoritative documents are prepared or validated by other parties and sent to the auditee. Even though
these are internal sources of audit evidence, they will contain original signatures, seals, engravings and other
distinctive stylistic formal attributes that make them less susceptible to alteration by the auditee, and thus more
reliable and convincing as audit evidence. Ordinary documents prepared by outsiders that could easily be forged or
altered in ways that the auditor could not easily detect are less reliable source of documentary audit evidence.
8-20 “Vouching” means the examination of documents. Generally, an item of financial information is selected from an
account, and the auditor then goes backward through the bookkeeping-filing system to find the source
documentation which supports the item selected.
“Tracing” essentially is the opposite direction compared to “vouching.” In the process of tracing, the auditor
selects sample items of basic source documents and proceeds forward through the bookkeeping process to find
the final recording of the accounting transactions.
“Scanning” refers to the auditor’s scrutinizing documentation or bookkeeping records (account details or entries in
journals) for unusual items and events.
8-21 Strengths of computation-based evidence from recalculations are its reliability and objectivity. Limitation is the
that its results are only as good as the underlying components the auditor uses in the computations, as these still
need to be audited to ensure they are reliable.
8-22 Strengths of observation are objectivity, but a limitation is that it only provides evidence at the time of the
auditor’s observation not other times. If people know the auditor is watching they may perform differently than
they usually do. Another weakness that the evidence is a function of the observer’s judgment and ability to
properly assess what is being observed, which could be biased or ill-informed.
8-23 Auditors need to control the entire confirmation process so there is no opportunity for the auditee to alter the
confirmation requests or responses.
8-24 Auditors can help the effectiveness of confirmation requests by:

a. Having the confirmation letters printed on the auditee’s letterhead and signed by an auditee officer.
b. Being careful to be assured of reliable addresses for recipients; that is, being assured that the confirmations
are not misdirected (for example, to an auditee’s accomplices in fraud).
c. Asking confirmation of information that recipient can supply, like the amount of a balance or the amounts
of specified invoices or notes (not the balances of homeowners’ mortgages or financial amounts, like
certificates of deposit with accrued interest, for which people usually do not keep their own accounting
records).
d. Controlling the mailing and return of confirmations so the auditee cannot tamper with them.
e. Receiving the reply directly, so the auditee cannot intercept and alter them.
f. Following up on any confirmations that have no response to determine the reason. This may indicate a
customer that does not exist.
8-25 Analysis consists of identifying the components of a financial statement item or account to on the basis of
particular characteristics that are relevant to designing analytical or other audit procedures; studying meaningful
relationships among components of financial and non-financial information to form expectations about what
amounts recorded in the accounts should be; comparing such expectations with the recorded amounts to identify
inconsistencies ; and using the results of this comparison to help determine what, if any, other audit procedures
are needed to obtain sufficient appropriate audit evidence that the recorded amounts are not materially
misstated. [CAS 520]
8-26 Analysis is used at:

1. the planning stage to identify risks and guide the design of audit work
2. the field work stage as substantive procedures for generating evidence
3. the end of the audit as an overall review and evaluation when forming a conclusion as to whether the
financial statements as a whole are consistent with the auditor’s understanding of the business as the basis
of the audit opinion.
8-27 Information sources for analysis include:

- Financial account information for comparable prior period(s).
- Company budgets and forecasts.
- Financial relationships among accounts in the current period.
- Industry statistics.
- Nonfinancial information from the company’s information systems.
8-28 When analysis is used to provide substantive evidence, auditors need to use independent, reliable information to
perform the analytical procedures. Thus, the sources of information need to be assessed for independence and
objectivity. Quantitative information must be verified by the auditor if a high level of reliance is placed on the
evidence provided by analysis.
8-29 Analysis can be very effective because it integrates evidence from a variety of information sources and often
provides an independent way of providing evidence about whether the financial statement assertions hold true,
i.e., it can corroborate other evidence. Analysis also allows the auditor to assess or detect unusual or unexpected
patterns in account relationships, making it an effective risk assessment procedure as well as a revealing risk
response procedure.
8-30 Methods and sources of information for understanding an auditee’s business and industry:
Inquiry, Including Prior Working Papers--prior audit working papers, personnel who worked on the audit in prior
years are available to convey their understanding of the business, inquiry and interviews with the company’s
management, directors, and audit committee.
Observation--take a tour of the company’s physical facilities, keeping eyes open for activities and things that
should be reflected in the accounting records. The tour is the time to see company personnel in their normal
workplaces.
Study. Numerous sources--CPA-Canada and AICPA industry accounting and auditing guides, specialized trade
magazines and journals, registration statements and Annual Reports filed with the securities market regulators,
general business magazines and newspapers (Financial Post, Report on Business, Business Week, Forbes, Fortune,
Harvard Business Review, Barron’s, and the Wall street Journal).
8-31 Experts are needed in audits where the auditors need understanding and evidence that can only be obtained by
consulting with persons skilled in fields other than accounting and auditing, such as actuaries, appraisers, legal
counsel, engineers, chemists and geologists. When using evidence from experts as audit evidence, the auditor is
required to ensure the expert has appropriate professional qualifications and a good reputation.
8-32 The auditor requires evidence to judge rationally the financial statement assertions in management’s financial
statements. If evidence does not relate to one of the management assertions, the evidence is not relevant to the
auditor.
8-33 To be considered appropriate, evidence must be relevant and reliable. To be relevant, audit evidence must relate
to at least one of the assertions. The reliability of audit evidence depends on its nature and source. The hierarchy
of evidence reliability indicates the range from the strongest and most reliable (physical observation and
computation) to the weakest and least reliable (management representations).
8-34 Judgment is applied to decide what is the most persuasive evidence that can be obtained in a cost-effective
manner relative to a particular audit objective. Trade-off may be required if audit evidence that would be highly
reliable and relevant is prohibitively costly. For example, if we wait till all the accounts receivable are collected we
have 100% assurance that they existed and were correctly valued, but this evidence is impossible to obtain as it
would take a very long time. In situations where no highly reliable single source of evidence is available, the
auditor uses judgment to decide whether there may be two or more less reliable pieces of evidence that, when
evaluated together, are adequate to support the assertion. Good professional judgment is required to make the
decision on what is appropriate, sufficient evidence in a particular audit.
8-35 External documentary evidence is evidential matter obtained from the other party to an arm’s-length transaction
or from outside independent agencies. External evidence reaches the auditor directly and does not pass through
the hands of the auditee.
External-internal documentary evidence is documentary material that originates outside the bounds of the
auditee’s data processing system but which has been received and processed by the auditee.
Internal documentary evidence consists of documentary material that is produced, circulates, and is finally stored
within the auditee’s information system. Such evidence is not touched by outside parties at all or is several steps
removed from third-party attention.
8-36 The problem with evidence obtained from related parties is that the source is potentially biased, and the
information may be self-serving and misleading.
8-37 Appropriateness refers to evidence’s relevance and reliability. Sufficiency refers to the amount of evidence, i.e.,
was enough evidence obtained to convince a reasonable well-informed person (or a judge) that the financial
statements are not misstated?
8-38 If an auditor has not been able to obtain sufficient appropriate audit evidence about a material financial statement
assertion, CAS 330 states that the auditor should express a qualified opinion or a disclaimer of opinion.
8-39 The planning memorandum documentation summarizes all the important overall planning information. This
include the preliminary analytical review and the materiality and risk assessment, the work done to understand the
auditee’s business and risks, information about (1) investigation or review of the prospective or continuing auditee
relationship, (2) needs for special technical or industry expertise, (3) staff assignment and timing schedules, (4) the
assessed level of control risk, (5) significant industry or company risks, (6) computer system control environment,
(7) utilization of the company’s internal auditors, (8) identification of unusual accounting principles problems, and
(9) schedules of work periods, meeting dates with auditee personnel and completion dates. The planning memo is
basis for deciding on specific audit objectives and procedures to obtain sufficient appropriate audit evidence on
which to base the audit opinion.
8-40 One type of audit program is called the “internal control program,” and its objective is to guide the work involved
in:
Obtaining an understanding of the auditee’s business and industry.
Obtaining an understanding of management’s control structure.
Assessing the inherent risk and the control risk related to the financial account balances.
The other type of audit program is called the “balance-audit program,” and its objective is to specify the
substantive procedures for gathering direct evidence on the assertions (i.e. existence, completeness, valuation,
rights and obligations, presentation and disclosure) about dollar amounts in the account balances.
8-41 The nature of audit procedures refers to their identification with one of the general types of procedures--
recalculation, physical observation, confirmation, verbal inquiry, examination of documents, scanning, and
analytical procedures.
The extent of the application of procedures usually refers to the sample sizes of data examined, such as the
number of customer accounts receivable to confirm, or the number of inventory types to count. In audit sampling
applications, there is also a decision related to extent of which items to select from the population of items
sampled. Extent may also refer to how frequently a scanning procedure is performed, e.g. review all sales entries
for four days in each of four months.
The timing of audit procedures refers to when they are performed, usually at (1) interim, at (2) year-end, or after
year end during the field work. However, timing may have other aspects such as surprise procedures
(unannounced to auditee personnel).
8-42 Audit file working papers contain the documentation that supports the decisions regarding procedures necessary
in the circumstances and all other important decisions made during the audit. They are the auditors’ proof they
complied with generally accepted auditing standards and hence are support for the value of the audit to outsider
users who rely on audited financial statements. The situation when Andersen was found destroying audit working
papers for an auditee under SEC investigation, Enron, shows the impact of documentation on the reputation of the
audit firm and the value of an audit.
8-43 In the permanent audit file:

1. Copies or excerpts of the corporate or association charter, bylaws, or partnership agreement.
2. Copies or excerpts of continuing contracts such as leases, bond indentures, and royalty agreements.
3. A history of the company, its products, markets and background.
4. Copies or excerpts of stockholders, directors, and committee minutes on matters of lasting interest.
5. Continuing schedules of accounts whose balances are carried forward for several years, such as owners’
equity, retained earnings, partnership capital and the like.
6. Copies of prior years’ financial statements and audit reports.
Permanent audit file documents contain information of continuing interest over many years’ audits of the same
auditee, such as articles of incorporation, shareholder agreements and long-term contracts. Financial or other
information in the current year that is related to these agreements and contracts will be verified by comparing to
these permanent records.
8-44 Audit administration papers filed in the current working paper file (usually in the first part of the file).
1. Engagement letter.
2. Staff assignments.
3. Auditee organization chart.
4. Memoranda of conferences with management.
5. Memoranda of conferences with the director’s audit committee
6. Preliminary analytical review notes.
7. Initial risk assessment notes.
8- Initial materiality assessment notes.
9. Engagement planning memorandum/Overall Audit Strategy document
10. Audit engagement time budget.
11. Internal control questionnaire and control analyses.
12. Management controls questionnaire.
13. Computer control questionnaire.
14. Internal control system flow charts.
15. Audit program.
16. A working trial balance of general ledger accounts.
17. Working paper record of preliminary adjusting and reclassifying entries.
18. Memoranda of review notes and unfinished procedures (all cleared by the end of the field work.)
8-45 The most important aspect of the current audit evidence papers is the requirement that they show the audit
decision problems and their conclusions. These papers must record the proposition to be audited, the evidence
gathered, and the final decision. The working papers should demonstrate satisfaction of the field work standards
and provide support for the audit report.
8-46 Indexing allows for each section to be given to different audit team members and for easy expansion within a given
section without affecting other sections. Cross-indexing documents the connections between different accounts
and transaction streams that are audited in different sections of the file so the links can be followed by other audit
team members or by the audit supervisor or manager who is reviewing the working papers.
8-47 Working papers should be clear, concise, complete, neat, well indexed and informative. Each separate working
paper (or multiple pages that go together) should be complete in the sense that it can be removed from the
working paper file and considered on its own, with proper cross-reference available to show how the paper co-
ordinates with other working papers. The papers must record the management assertions that were audited (book
values or qualitative disclosures), the evidence gathered about them and the final decisions. Auditing standards
(CAS 300 and 230) recommend that the working papers show (1) evidence that the work was adequately planned
and supervised; (2) a description of audit evidence obtained include memoranda, check lists, questionnaires,
flowcharts, audit programs, schedules, correspondence and extracts of legal documents; (3) evidence of the
evaluation and disposition of misstatements; and (4) copies of letters or notes concerning audit matters reported
to the auditee. The working papers also should explain how exceptions and unusual accounting questions were
resolved or treated.
8-48 Audit software allows the use of electronic working papers and can automate many documentation tasks such as
automatically carrying over adjustments to related working paper documents and the financial statements,
integrating the audit information and facilitating access, review and changes to the format, content or order of the
files. Because most auditee data are already in electronic form, they can be imported into the audit software.
Software allows for electronic communication and sharing of information among staff and supervisors. The entire
audit process can be more efficient through use of standard templates and electronic questionnaires. Audit
working paper software can also facilitate analysis. Links can be established to other databases or even websites so
that data or information from these sources can be cross referenced or transferred to the working papers. Thus,
audit staff work and various other sources of information can be integrated to support the auditor’s opinion.
SOLUTIONS FOR MULTIPLE CHOICE QUESTIONS
MC 8-1 [LO4] An audit program contains:
a. specifications of audit standards relevant to the financial statements being audited.
b. specifications of procedures the auditors believe appropriate for the financial statements under audit.
c. documentation of the assertions under audit, the evidence obtained, and the conclusions reached.
d. reconciliation of the account balances in the financial statements with the account balances in the auditee’s
general ledger.
MC 8-2 [LO2] When auditing the existence assertion for an asset, auditors proceed from the:
a. financial statement numbers back to the potentially unrecorded items.
b. potentially unrecorded items forward to the financial statement numbers.
c. general ledger back to the supporting original transaction documents.
d. supporting original transaction documents to the general ledger.
MC 8-3 [LO2] The objective in an auditor’s review of credit ratings of an auditee’s customers is to obtain evidence related to
management’s assertion about:
a. compliance.
b. existence.
c. ownership.
d. valuation.
MC 8-4 [LO3] Jones, PA, is planning the audit of Rhonda’s Company. Rhonda verbally asserts to Jones that all the expenses
for the year have been recorded in the accounts. Rhonda’s representation in this regard:
a. is sufficient evidence for Jones to conclude that the completeness assertion is supported for the expenses.
b. can enable Jones to minimize his work on the assessment of control risk for the completeness of expenses.
c. should be disregarded because it is not in writing.
d. is not considered a sufficient basis for Jones to conclude that all expenses have been recorded.
MC 8-5 [LO3] The evidence considered most reliable by auditors consists of:
a. internal documents, such as sales invoice copies produced under conditions of strong internal control.
b. written representations made by the president of the company.
c. documentary evidence obtained directly from independent external sources.
d. direct personal knowledge obtained through physical observation and mathematical recalculation.
MC 8-6 [LO2] Confirmations of accounts receivable provide evidence primarily about these two assertions:
a. Completeness and valuation
b. Valuation and ownership
c. Ownership and existence
d. Existence and completeness
MC 8- 7 [LO-3] Obtaining sufficient audit evidence over the sales of a given company means that the auditor
a. tested all sales transactions for the given period
b. tested more than 50% of the sales transactions for the given period
c. tested a reasonable sample of sales transactions for the given period
d. tested only the sales transactions with an amount higher than the materiality
MC 8-8 [LO5] An audit working paper that shows the detailed evidence and procedures regarding the balance in the
accumulated depreciation account for the year under audit will be found in the:
a. current file evidence working papers.
b. permanent file working papers.
c. administrative working papers in the current file.
d. planning memorandum in the current file.
MC 8-9 [LO5] An auditor’s permanent file working papers would most likely contain:
a. internal control analysis for the current year.
b. the latest engagement letter.
c. memoranda of meetings with management.
d. excerpts of the corporate charter and bylaws.
MC 8-10 [LO1] Tima is working on the audit of Stellar Productions Inc. Today she is touring the factory with the production
manager, and she is discussing the procedures for recording the flow of goods through the production process with
various factory employees. Tima is applying which kinds of audit evidence techniques?
a. Inquiry and inspection.
b. Observation and confirmation.
c. Observation and documentation.
d. Inquiry and observation.
MC 8-11 [LO1] Calvin is performing the following auditing procedures related to revenues: i) Obtaining production records
of physical quantities sold and calculating an estimate of sales dollars based on average sale prices; ii) Comparing
revenue dollars and physical quantities with prior-year data and industry economic statistics. Which types of
evidence gathering procedures is Calvin using?
a. i) observation; ii) confirmation
b. i) recalculation; ii) analysis
c. i) recalculation; ii) inspection vouching
d. i) analysis; ii) analysis
MC 8-12 [LO1] Bosso Properties Inc. records its real estate investment properties at fair value under IFRS. Sidra is
performing the following procedures as part of the audit program for this asset: i) For investment property valued at
fair value, examine and verify independent appraisals supporting valuation; ii) Summarize the additions and disposals
recorded in Bosso’s detailed investment property subsidiary records, and agree the balance to the general ledger
control account. Which types of evidence gathering procedures is Sidra using?
a. i) confirmation; ii) inspection scanning
b. i) recalculation; ii) analysis
c. i) inspection vouching; ii) recalculation
d. i) analysis; ii) recalculation
MC 8-13 [LO1] Marc, a junior auditor, attended the inventory count of Mira’s Office Depot, a large retailer of office supplies
and electronics. Marc watched Mira’s employees doing the count and reported on whether or not the inventory
count’s directives were followed. The above procedure is an example of:
a. Inspection
b. Observation
c. Reperformance
d. Analysis
MC 8-14 [LO1] As part of the review of McMaster Auto Parts, France met with the CEO to obtain an explanation for their
decreasing gross margin percent for this year as compared to last year. The above procedure is an example of
a. Confirmation
b. Inquiry
c. Observation
d. Reperfomance
SOLUTIONS FOR EXERCISES AND PROBLEMS
EP8-1 Audit procedures
Types of procedures used by auditors in general, with examples:

1. Recalculation by the auditor
*
recomputing the auditee’s calculation of depreciation expense
2. Observation by the auditor
*
observation, test-counting of auditee’s physical inventory-taking
3. Confirmation by letter
*
obtaining accounts receivable confirmations
*
obtaining auditee’s lawyer’s letter
4. Inquiry and written representations
*
ask auditee personnel about accounting events
*
complete an internal control questionnaire
*
obtain written representation letter from auditee management
5. Vouching
*
find brokers’ invoices and cancelled checks showing agreement with record amounts for securities
investments.
6. Tracing
*
select a sample of shipping documents and trace them to sales invoices, sales journal recording and
posting to general ledger
7. Scanning
*
scan expense accounts for credit entries
*
scan payroll check lists for unusually large checks
8. Analytical procedures--any example that fits one of these:
*
compare financial information with prior periods
*
compare financial information with budgets and forecasts
*
study predictable financial information patterns (e.g., ratio analysis)
*
compare financial information to industry statistics
*
study financial information in relation to nonfinancial information
EP8-2 Potential Audit Procedure Failures
This is a very open-ended discussion topic. Students’ responses could be quite varied depending upon their
experience and imagination. The best classroom strategy is to start with one of the procedures, then list the
students’ suggestions on the chalkboard. The discussion can become very lively! Refer also to the box on page 378.
EP8-3 Confirmation procedure
a) An audit confirmation is a written statement to the PA from someone outside the enterprise on a fact
which that person is qualified to affirm.
b) The two main characteristics a confirmation should possess are:

1. The party supplying the information requested must be knowledgeable and independent, i.e., he
must have knowledge of information of interest to the auditor and he must be outside the scope of
influence of the organization being audited, and
2. The auditor must obtain the information directly from the informed party.
EP8-4 Audit Procedure Terminology
1. Scanning for debit balances in accounts payable

Recalculation of amounts on supporting documents
Vouching of account entries to supporting documents
2. Vouching of policies from expense and prepayment entries
Recalculation of expiration of insurance premium
Analysis of interrelationships--compare insurance coverage to assets owned and leased
3. Scanning inventory records for “old” last-issue dates
Verbal inquiry--question inventory control personnel about slow-moving inventory
Vouching--examine journal entries for evidence of actual book writedown of the specific inventory items
4. Tracing--trace remittance amounts to appropriate customer’s account
Recalculation--recalculate amount of discounts and allowances
Vouching--examine authoritative documents supporting unusual discounts and/or allowances
5. Observation and examination by the auditor--of the inventory and the inventory-taking procedures
Confirmation by letter--of inventory held in outside warehouses
Recalculation--of the accuracy of cost-flow calculations
EP8-5 General Audit Procedures and Financial Statement Assertions
The related assertions are taken from the textbook explanation of the procedures.
General Audit Procedures Related Management Assertions
1. Recalculation Existence, Valuation
2. Physical observation Existence, Valuation
3. Confirmation Existence, Rights (Ownerships)

Valuation (sometimes)
Cutoff (sometimes)
4. Verbal inquiry All assertions: however, responses typically yield more

assertions, in turn subject to audit with corroborating
evidence
5. Examination of documents Existence (vouching direction)

Completeness (tracing direction)
Valuation or allocation
Rights and obligations
Presentation and disclosure
6. Scanning Raises questions that may be relevant to all objectives, but

may not produce actual “evidence.”
Since it is performed on recorded amounts, it works best for
Existence, Valuation, Rights, and Presentation/Disclosure.
When applied to source documents, it might work for the
completeness assertion.
7. Analytical Procedures Existence or occurrence

Valuation
Completeness
EP8-6 Relative Appropriateness of Evidence

a) Evidential matter obtained from independent sources outside an enterprise provides greater assurance of
reliability (competency) than that which is secured solely within the enterprise.
b) Accounting data and financial statements developed under satisfactory conditions of internal control are
more reliable (competent) than those which are developed under unsatisfactory conditions of internal
control.
c) Direct personal knowledge obtained by the independent auditor through physical examination,
observation, computation, and inspection is more persuasive than information obtained indirectly.
EP8-7 Relative Appropriateness of Evidence
1. Types of evidence
in reliability rank Evidential items/sources
1. External d. Letter from creditor
2. External-internal a. Monthly statements
3. Internal b. Accounts payable register
4. Mathematical (based on c. Audit computation of
unaudited data) discounts
2. 1. Mathematical (based on c. Audit computation of expense

audited data) amounts
2. External a. Letter from bond trustee
3. External-internal d. Cancelled cheques
4. Internal b. Minutes of directors’
meetings
EP8-8 Audit Working Papers

a) 1. The functions of audit working papers are to aid the auditor in the conduct of his or her work and to
provide support for the opinion and the compliance with auditing standards.
2. Working papers are the auditor’s records of the procedures performed, and conclusions reached in
the audit.
b) The factors that affect the auditor’s judgment of the type and content of the working papers for a particular
engagement include:
1. The nature of the auditor’s report.
2. The nature of the auditee’s business.
3. The nature of the financial statements, schedules or other information upon which the auditor is
reporting and the materiality of the items included therein.
4. The nature and condition of the auditee’s records and internal controls.
5. The needs for supervision and review of work performed by assistants.
c) Evidence which should be included in audit working papers to support an auditor’s compliance with
generally accepted auditing standards includes:
1. Evidence that the financial statements or other information upon which the auditor is reporting
were in agreement or reconciled with the auditee’s records.
2. Evidence that the auditee’s system of internal control was reviewed and evaluated to determine the
nature, timing, and extent of audit procedures.
3. Evidence of the auditing procedures performed in obtaining evidential matter for evaluation.
4. Evidence of how exceptions and unusual matters disclosed by auditing procedures were resolved or
treated.
5. Evidence of the auditor’s conclusions on significant aspects of the engagement with appropriate
commentaries.
d) The auditor should perform an adequate examination as cost-effectively as possible, and the preceding
year’s programs will aid in doing this. The preceding year’s audit programs ordinarily contain information
useful in the current examination (such as descriptions of the unique features of an auditee’s operations or
records, a formalized sequence of audit steps in logical order, and approximate time requirements to
perform various phases of the work.) The auditor should decide whether it is still appropriate to use the old
program or prepare a new one.
EP8-9 Audit procedure for error detection.
a) Sales are understated, A/R are understated.
b) It is a cut off error. It affects the completeness assertion because a sale that occurred in the current
year was left out of this year’s sales total, making it understated/incomplete. The sale was put in the
following year. Unless the error is corrected, the following year will be overstated by a sale that did
not occur/exist in that period.
c) Cut off test procedures would detect this error, e.g. Inspect internal sales documentation, and trace
documentation of last completed jobs before the year end to the sales records to ensure they are all
recorded in correct period.
d) Accounts receivable turnover with error

= $3,200,000 / $450,000 = 7.1 times
Accounts receivable turnover after correcting error
= ($3,200,000 + $145,000) / ($45,000 + $145,000) = $3,345,000 / $595,000= 5.6 times
Correcting the error makes the turnover lower, indicating poorer performance to a user, such as the bank
e) In size the error amounts to 5% of total revenue so it could be considered material based on its size
(quantitative factor). The error also has the effect of shifting revenues to following year. The general manager
has already received her maximum bonus this year - note: 3,200,000 * 1% = $32,000 and maximum is $24,000
so maximum is already exceeded. So the error may affect bonus plan, by shifting profit to next year she will be
more likely to make the bonus next year. This qualitative factor also suggests the error is material as it affect
important users and decisions whether manager should receive a bonus. This qualitative factor could make
the error more significant for the Board as it may affect decisions they make, and it may indicate to them
management has attempted to manipulate the financial statements.
EP8-10 Identifying the type of audit procedure
1 – Inspection
2 – Reperformance / Recalculation
3 – Confirmation
4 – Inquiry
5 – Inspection
6 - Observation
7 – Analysis
8 – Inquiry
EP8-11 Information sources and reliability of evidence
Situation 1 -
The summary of the inventory count would be considered of lower quality than Griffin and Fox’s accountant
observation of the count. This is because the summary of the inventory count is an internally generated
document that could be influenced by a bias of Melba’s employee with a desired outcome for the company’s
financial performance. Griffin and Fox’s staff accountant should be independent and therefore, his observations
should be objective.
Situation 2 –
The estimate of the legal counsel provided during a discussion would be considered of lower quality than the
confirmation letter obtained from the external counsel. The fact that the external counsel is independent from
Melba increases the quality of the information as he should be more objective. Further, it would be easier for the
auditor to prove the support for his conclusion in his audit file with a signed confirmation letter than by a summary
of a discussion with the internal legal counsel.
Situation 3- The automated report from the computer system would be considered of higher quality than the
overall analysis performed by the auditor. This is true only since the control environment and internal controls of
Melba have been assessed as strong. This assessment indicates that systems are working according to
expectations and the output from the system can be trusted. This is better than a high level analysis, even if the
analysis is performed by the auditor.
Situation 4 – The sales invoices would be considered of higher quality than the sales ledger. The sales invoices are
internal / external documents while the sales ledger is only an internal document. As the sales invoices are sent to
clients, if there was an error in the invoice, the client would likely review it and report it. As a result, there is a
higher chance that an incorrect sales invoice would be detected. The sales ledger is only used internally and
therefore, an internal bias could be present or there is a higher chance that an error could go undetected.
SOLUTIONS FOR DISCUSSION CASES
DC8-1 Financial Assertions and Audit Procedures
The objectives for the audit of Karwan’s securities investments at December 31 are to obtain evidence about the
assertions implicit in the financial presentation, specifically:
1. Existence. Obtain evidence that the securities are bona fide and held by Karwan or by a responsible
custodian.
Occurrence. Obtain evidence that the loan transaction and securities purchase transactions actually took
place during the year under audit.
2. Completeness. Obtain evidence that all the securities purchase transactions were recorded.
3. Ownership/Rights. Obtain evidence that the securities are owned by Karwan.
Obligation. Obtain evidence that $500,000 is the amount actually owed on the loan.
4. Valuation. Obtain evidence of the cost and market value of the securities held at December 31. The
investments are being held for trading, so will need to be marked to market in the year-end financial
statements.
5. Presentation and Disclosure. Obtain evidence that the investments have been properly classified as
financial instruments held for trading, and that the notes to the financial statements contain correct
disclosures regarding their measurement at fair value, as well as the required disclosures related to their
risks.
Note also that in understanding these transactions, the auditors also have obtained evidence regarding the
loan and the committed nature of the exisiting plant assets. As part of the audit programs for the loan and
the plant assets, the audit team should obtain evidence that restrictions on the use of the assets are
disclosed fully and agree with the loan documents, that the loan is properly classified as a long-term
financial liability, and that the other details of the loan agreement, such as repayment terms and interest
rate, are fully disclosed.
DC8-2 Financial Assertions and Audit Objectives
The objectives for the audit of Karachi’s product warranty liability at December 31 are to obtain evidence about
the assertions implicit in the financial presentation, specifically:
1. Existence. Obtain evidence that the warranty liability is not overstated and that all appropriate warranty
related costs have been recorded as a reduction of the liability balance.
Occurrence. Obtain evidence that the sales giving rise to increases in warranty liability actually took place
during the year under audit.
2. Completeness. Obtain evidence that all the sales transactions giving rise to warranty liability were
considered in determining the liability amount.
3. Ownership/ Obligation. Obtain evidence that the warranty liability is an actual legal obligation of Karachi by
considering trade practice, terms of sale.
4. Valuation. Obtain evidence to verify the warranty amount has been calculated correctly as of December 31
based on accurate inputs from sales and warranty costs incurred, as well as considering warranties that
have expired.
5. Presentation and Disclosure. Assess whether the presentation of the liability in the balance sheet, and
disclosure of the liability and the underlying accounting policy in the footnotes are appropriate and in
accordance with GAAP.
The completeness and valuation assertions may be assessed as having ‘High’ RMM. Presentation also may
be high since this is a new policy and the company will need to determine the appropriate financial
statement presentation and accounting policy note and specific disclosures required by GAAP. The other
assertions are probably ‘not High.’
Specific auditing procedures that could be performed in this business to obtain the required evidence can
be developed, using the evidence techniques listed in the chapter to develop the ‘nature’ of the
procedures. One possible approach is:
1. Existence. Enquiry of management regarding new warranty policy. Inspection of sales invoice
documents that state the warranty offered. Trace the warranty costs incurred to the warranty ledger
balance to ensure it is reduced appropriately. Recalculate the estimated warranty using the audited
sales revenues, which has been audited for existence/occurrence in the sales transactions audit
testing.
2. Completeness. Recalculate the estimated warranty using the audited sales revenues, which has been
audited for completeness in the sales transactions audit testing. Take into account the actual
warranty costs and trends, and expiry dates of the outstanding warranty obligations.
3. Ownership/ Obligation. Similar evidence as for existence will relate to the obligation assertion.
Analysis of normal trade terms in the industry may also be relevant.
4. Valuation. In addition to recalculation using management’s assumptions and data, verify all
significant data used are audited (e.g. warranty costs, timing of sales/warranty expiry). Assess the
reasonability of the assumptions regarding future warranty returns by performing an independent
analysis of the factors giving rise to the obligation.
5. Presentation and Disclosure. Analyze disclosures required by GAAP and appropriate accounting
policy. Analyze the presentation and classification to ensure it complies with GAAP. Assess whether
the presentation of the liability in the balance sheet, and disclosure of the liability and the
underlying accounting policy in the footnotes are appropriate and in accordance with GAAP.
DC8-3 Appropriateness of Evidence and Related Parties
a) Do you perceive any problems with related party involvement in the evidence used by M. Johnson? Explain.
 Yes, there are problems. Verbal assurance of collectability from Bumpus, the S&L officer with an
investment in the Smith Street property, is the weakest type of self-serving information.
 Bumpus is a related party and information from him ought to be regarded as biased.
 Another problem lies in the appraisal company. With the name of Guaranteed Appraisal Partners,
Inc., the appraisers may be related, even owned by, the auditee--Guaranteed Savings & Loan
Company. An auditor’s general knowledge of financial institution difficulties in real estate lending and
the widespread problems with appraisers should alert Johnson to the possible relation of the
appraisers to the auditee. Further investigation should be carried out to identify the appraisers.
b) Do you perceive any problems with M. Johnson’s reasoning or the competence of evidence used in that
reasoning?
 Yes, there are problems. In addition to the dubious related party sources of information just
mentioned, Johnson’s “assumption” about the collectability of the Baker Street loan is unwarranted.
Auditors are not entitled to “assume” collectability on any grounds with supporting evidence. The
fact that a loan is new or construction is still in progress is no reason to “assume” collectability.
DC8-4 Audit Plan with Weaknesses in Revenue Controls, Not-for-Profit Auditee.
a) The main business risk factors affecting the nursing home’s continuing operations are the uncertainty about
being able to renew the bank loan, and the change in the industry towards more new government funded
nursing homes. These risks affect KH’s future viability as its revenues may be reduced if the new homes
draw away patients, and if the loan cannot be renewed it may lack the working capital to keep its operations
going. These factors increase the risk of financial failure, and this high level of business risk would likely lead
the auditor to lower the level of audit risk that is acceptable on this engagement.
b) The risk of material misstatement appears to be high because there is a history of errors in invoicing
patients and accounts receivable recording. The accounts receivable balance is likely to be highly material
since it is the main revenue source. A further concern is the nature of the revenues in this organization -
these come from patients who are not very able to provide confirmation evidence, and this lowers the
reliability of evidence available to support the revenue existence and valuation. Also, control risk is high in
some areas as accounting staff appears to be unable to apply effective independent verification in the
invoicing and receivables recording processes. The effectiveness of management supervisory controls over
cash transactions, and the lack of indicators of fraud risk, lowers the concern about the control weaknesses
having significant impact on the financial statements.
c) The main stages of the audit and the procedures used in this case are outlined below.
Understanding the auditee and its risks

 The case indicates the auditor has obtained an understanding of KH’s internal control and performed
a preliminary assessment. Enquiries of auditee personnel and study of prior-year audit working paper
information would be the procedures used. Enquiries of management, external parties and industry
research sources would have provided information about the plans to build new government funded
homes that will possibly compete with KH.
Assessing the risk of material misstatement (inherent and control risks combined)
 Based on inquiry of auditee personnel and observation of accounting information system and internal
control there appear to be weaknesses in controls over invoicing and accounts receivable recording.
While it would not be effective to test these controls, the auditor would need to consider these
control weaknesses by assessing whether the organization’s procedures are adequate to prevent
fraud. The auditor has assessed that controls over cash receipts are effective, so testing the controls
over cash receipts would be planned for. Dual purpose tests would be most efficient to provide both
control and substantive assurance. These tests would involve enquiry and observation of the control
procedures, and examination of the documents and records recording the cash receipts.
Substantive tests of details of transactions and account balances

 The overall audit approach planned would emphasize substantive tests of transactions for revenues.
For a sample of patient invoices from the sales journal, the auditor will obtain evidence about
existence and valuation by examining supporting documents such as the invoice and the supporting
patient records showing the services KH provided, by verifying the service fee agrees to the approved
fee schedule, and by recalculating the service revenues to ensure accuracy. Verifying there are no
recording misstatements would be tested by tracing invoice details (patient, amounts and dates) to
the accounts receivable subledger, and tracing posting totals from the sales journal to the general
ledger.
 As the confirmation responses are unreliable, alternative procedures such as verification of
subsequent cash receipts to banking records would be used to verify the existence and ownership of
receivables (this was outlined above as a component of the dual purpose testing on cash receipts
transactions). Other substantive tests of transactions for revenues would also address completeness
by searching for unrecorded revenues (direction of this completeness testing is tracing from a sample
of patient records to revenue billings). If there are any large, long overdue, or unusual invoices, these
would be confirmed. Given the nature of the patients, bad debts are likely and so a careful
examination of overdue accounts and consideration of the adequacy of the allowance for doubtful
accounts is necessary to provide evidence that accounts receivable are valued at net realizable value.
Analytical procedures
 Analysis would be used extensively to provide substantive evidence. In addition to analysis of
financial relations and trends in revenues, receivables, and bad debts, comparisons with non-financial
information such as number of beds, occupancy statistics, and service capability of the nursing staff
could provide very powerful evidence of any material misstatements in revenues.
DC8-5 Working paper review
a) The following information is missing:

*
The date of purchase of S security
*
The date of purchase and sale of R security
*
Data concerning the accrual and/or receipt of interest due on R to date of sale
*
Data concerning the accrual and/or payment of interest due on S to the date of purchase
*
Justification for accrual of dividends
*
Accounting treatment of bond discounts
*
Data concerning the December 31, 2002 revenue accruals
*
Data required to evaluate the classification of securities
b) The following procedures were not noted as having been performed:

*
The securities were not physically inspected or confirmed.
*
The broker’s advice (or other independent corroborating evidence) verifying the sale of R was not
examined.
*
Dividend rates were not verified by reference to public records (Standard & Poor’s) of dividend
declarations.
*
The stated interest rates, maturity dates, and market values were not verified.
*
Computations of year-end accruals were not made.
*
Not all amounts (for example, loss on sale of R) were traced to the general ledger.
DC8-6 Comprehensive Audit Planning Case
a) Factors that support accepting/continuing ECR, based on facts given in case, include:
Obtaining and reviewing financial information about prospective client - are there unusual accounts or
business practices that audit firm is not familiar with? Need to understand business risks.
--ECR imports processes and sells fair trade coffee beans to retail-level businesses in Ontario - we need to
understand factors such any regulations affecting this business, nature of sales and purchasing
agreements, - we may have valuation or ownership challenges in doing audit based on foreign purchases
and long shipping times, also letter of credit arrangements , risks do not appear unusually high
Is the financial condition good?

--ECR profits are around $2 million, have Assets-Liabilities around $2.2 million - strong balance sheet &
earnings, high certainty it will continue as a going concern
Evaluation of audit firm’s independence

-- no facts given in case, no indication of conflicts in this regards, firm should re-examine if there are any
changes from previous year, or any concern audit team members becoming too familiar over time
indicating they should be rotated off the engagement.
Does audit firm have competency and resources to do an effective audit?
--Consider ECR size, location, nature of operations, and business seems simple enough that can assume
audit firm has competence to audit this business, stated in case this is a continuing audit so can assume
have competence
Determine management’s willingness to accept responsibility for financial statements that are fairly
presented in accordance with GAAP/acceptable framework and accept responsibility for adequate
internal control
-- management seems willing to provide auditors with information, last year audit found an error (<~1%
of inventory) but not corrected - paid bonus before audit finding were in may suggest lack of regard for
audit value, or confidence in accuracy of accounting. No facts given about control, fair presentation etc.
Communicate with predecessor auditor, if new engagement (assumption required in this case) to learn
any reasons not to accept audit engagement, key risks and carryforward information from past audits.
b) Calculate net income from trial balance data

= $2493k* (or 2993 before bonus if bonus considered arbitrary, not ‘normal’)
Take 5-10% to provide a preliminary range of $125 to 250K
Note relevant qualitative considerations to determine the Overall Materiality level from the preliminary
range -
A significant error was found last year - we should consider the possibility that similar errors exist this
year; this indicates we should go to a lower level in the range. It also has implications for the performance
materiality decisions, as discussed below.
Main users are pension funds. These are sophisticated investors who will have other information sources.
This supports going to the higher end of range
Relative size of other financial items, AR, Inventory, have large balances, suggests using the higher end of
range
This suggests a reasonable materiality judgment, consistent with our supporting reasons is to set the
Overall Materiality level at $200k.
Following the guideline provided in the case, the Overall Performance Materiality is calculated by simply
taking 70% or other amount, this is $140,000. Using this lower level of materiality for deciding on extents
of testing and performance of other auditing procedures will increase our chances of finding all material
misstatements. However we should also consider whether any other reasons indicate a different
approach is more valid (In this case an alternate approach is to use last year’s error discovered, so $200-
65 = $135k)
c) Auditor’s decision on acceptable audit risk (AR) level is based on nature of engagement, consequences of
audit failure. Three factors with appropriate impact on audit level acceptance, such as:
• Public vs. private company - It is not stated in the case if ECR is public, but it has fairly sophisticated
investors such as pension funds - this would lower AR willing to accept. If there are public investors
who are making risky financial decisions based on the audited financial statements, this also leads to
wanting a lower AR
• Auditee financial health/risk of business failure - The company appears sound. This may raise AR that
could be accepted. However, business risk factors suggest economic conditions may affect future
financial health (premium product, fluctuating market prices), so keeping a lower AR may still be
prudent.
• Management’s reputation/integrity, willingness to accept responsibilities for preparing GAAP
financial statements, for designing and implementing adequate internal control, and to provide
written representations. There may be some questions here since there are errors in a major account,
inventory, so this may tend to decrease acceptable AR level
d) In order to design an effective audit, auditors must understand the business and the economic
environment of the business including factors such as:
economic conditions - growth in sales in past years, but the recession may affect future expected growth
in luxury coffee
geographic locations - purchasing coffee beans around the world, with long time with risk of
loss/damages
developments in taxation and regulation - import duties, sales taxes changes to consider
specific industry characteristics & risks - reputation based on quality and ‘fair trade’ buying policy, extends
reporting interests of investors to a compliance assertion - are their claims true?
business objectives - grow sales, maintain premium pricing position
key strategies employed to meet those objectives - quality control, research/improve production
processes, etc.
risks that threaten achievement of those objectives - obtaining quality beans - price changes risk, product
quality & reputation to defend
e) Inventory in a coffee business will be made up of raw and roasted beans, beans on hand, and beans
shipped and in transit but already owned.
Assertions- Consider the following risk assessments with supporting reasons
Existence: high
- Inventory on ships can be lost or damaged by moisture/insects, ECR may not be able to establish legal
ownership due to complex payment arrangements with foreign suppliers, uncertainty
Completeness: medium
- Depends on good controls over recording all purchases that ECR has legal ownership of, possible to
miss recording unless controls are good
Valuation: high
- are the raw beans of suitable quality once they arrive? Long shipping times impose risk of damage and
loss
- are all shipping, insurance, duty, etc. costs captured? There will be a valuation impact if prices drop or
recover. This may increase complexity of valuation and increase risk of misstatement. Error in pricing
/valuation in prior year suggests higher risk
Ownership: High
- Similar factors as existence risks (but if ECR has good controls, that could lower this risk)
Presentation: medium
- classification is fairly straightforward, but disclosure of policies regarding valuation, ownership need to
be examined for accuracy
f) One example of an evidence procedure and the assertion the evidence is relevant is:
Examination of Inventory ‘in transit’ involving verification of inventory in terms of ownership, existence,
valuation (damage?) by confirmation of quantities & types of beans with suppliers, and with the shipping
company
Verify that terms of sale that allow ECR to take title have been met.
DC 8-7 Comprehensive Audit Planning case
a. The audit firm’s acceptance procedures should include:

Enquiry and analysis to Obtain and review financial information about the client, assess whether any significant
changes have occurred that can affect its auditability (i.e. the ‘preconditions for an audit in the CAS).
Evaluation of your audit firm’s independence, and its competency and resources to do an effective audit and be
able to comply with the professional ethics code and all relevant CASs
Enquiry and analysis to understand business risks
Enquiry to determine management’s willingness to accept responsibility for financial statements- responsibility for
internal control and acceptable financial reporting framework
Analysis to assess integrity of management - Look for news reports, consult with auditee’s banker, legal counsel or
others
b. Materiality decision will consider quantitative and qualitative factors.
Qualitative:
Consider financial statement user needs: Bank is main user. Bank will be interested in the profitability and
sustainability of SSL’s business, but will also be concerned with assets, as they are collateral for the loan, so we
should use the NIBT based starting point for the materiality decision, but also benchmark the income based
materiality level against one based on total assets.
Quantitative:
Calculate NIBT = 1,015,057 (excluding tax expense and bonus)
Apply rules of thumb percentages:
5%= 50,753
10%= 101,506
Calculate TOTAL ASSETS =11,554,148

Apply rules of thumb percentages:
HALF % 57,771
ONE % 115,541
Analysis:
Both the NIBT and TA bases yield similar materiality level range of around $50-100k
Materiality for the financial statements as a whole will be chosen at the lower end since the bank is relying on
audited financial statements to assess riskiness of its loans to SSL
Decision (judgment): Material for f/s as a whole: 60k
Performance materiality is less than ‘Materiality for the financial statements as a whole - We can use 70% rule of
thumb can be applied since no information given in case to support a more precise level judgment
Calculate: Performance materiality: 43k
Other valid approaches may be taken to determine appropriate materiality levels for the SSL audit.
c. Three business factors are identified based on considering economic and industry factors and how they might
lead to material misstatement in SSL’s financial statements.
Economic
- there is a recession
- SSL’s customer companies may be in financial difficulty, default or be late with payments of lease payments - this
risk can affect valuation of the lease receivables - allowance for bad debts (AFDA)
- interest rates are changeable, if rates are low due to recession SSL may write leases at a lower rate that can affect
SSL’s profitability, affecting the valuation of lease receivables
- credit worthiness of customers can change with economic conditions - this can affect AFDA estimates
Industry
- increasing competition brings other financial service businesses, banks into the business - can tighten margins
and create incentives to overstate profit.
- lease contract terms may need to be written to take riskier clients and assets to compete -this can affect
valuation of receivables
-equipment vendors may decide to do their own financing - can reduce profitability and ability to repay loans,
continue as a going concern
Other valid business risk points
d. Ratios that relate lease receivables and interest revenues, and lease receivables and AFDA, would be informative
about profitability and credit risk.
Bank loans and interest expense could be analyzed to assess financial condition.
Other information would include the list of leases, lease terms, interest rates, indicators of slow payment,
e. Assessments for RMM for Lease receivables in a direct finance leasing business, at the level of the five principle
assertions, with reasons that logically support the level assessed for each assertion, are suggested below.
Note that this solution is just based on one auditor’s judgments - other auditors’ approaches and reasoning could
differ, yet also be as valid or even better reasoned...
Existence: not high

Reasons: unlikely to be set up unless actually made a lease, verification by inspection of lease documents can
provide evidence, also inspection of cash collection records and documents
Completeness: not high

Reasons: this assessment depends on SSL having good controls over recording all new leases in their accounting
process, since it is possible to miss recording unless controls are good - we will evaluate controls accordingly to
confirm this but since SSL would likely not survive if it failed to record lease receivables it is reasonable to start
with this assessment
Valuation: high
Reasons: It is very uncertain whether repayments will be made, complex calculations of unearned interest revenue
are required, e.g. principle vs interest components, bad debt allowance,
Ownership: not high

Reasons: It is unlikely SSL will record leases it is not on title to, since legal documentation and signatures are
required that would be quite involved to fabricate
Presentation: high
Reasons: The accounting policies for lease valuation are complex and require understandable and complete
disclosure of details - all details in notes need to be verified to supporting documents
Other valid points
f. AR=IR x CR x DR (IR x CR= RMM)
The meaning of each term is as follows:
AR – Audit Risk - how much risk the auditor is willing to take of giving a clean opinion when the financial
statements are materially misstated, i.e., the risk of audit failure, AR is the complement of assurance
(AR=1/assurance). The auditor make a decision at the start of the audit on how much risk is acceptable, and must
achieve this level to complete the audit and form an opinion
IR – Inherent Risk - risk misstatement occurs in first place
CR – Control Risk - risk company’s controls will not prevent a misstatement, or detect a misstatement that
occurred
DR - Detection Risk - the risk the auditor’s procedures will not detect a misstatement that occurred and wasn’t
caught by controls. Note that the IR and CR factors are not controlled by the auditor - they just exist in the client’s
business and have to be dealt with. The DR factor is controlled by the auditor, and if the auditor lowers this risk by
gaining assurance from performing evidence gathering procedures, it will reduce the AR to the acceptably low level
required to obtain high assurance.
Explanation of how this model would help SSL’s auditors.

The factors can be viewed IR, CR, DR are the risk measures related to possible sources of assurance that can reduce
AR to the acceptable level
We have made a preliminary decision to assess CR less than maximum (100%) over the completeness assertion,
this means the auditor needs to plan control testing – to test effectiveness of controls. If the results of the control
testing do not support a low assessment of CR (i.e. we find the controls are not actually effective ) then we will
need to revise our audit plan and get a lot more direct substantive evidence about this assertion (possibly by
confirming a lot more receivables with customers).
Finally, since DR is determined based on the assessed IR, CR levels, and the acceptable AR chosen by the auditors,
the lower the DR that is required to reach the required low level of AR, the more substantive evidence gathering
work the auditors need to plan to do.
g. Some financial reporting fraud risk (management fraud) exists if there are debt covenant creating incentives for
the owner/manager to overstatement of revenues/assets to the bank, misallocation of principle/interest
components might allow profit to be overstated, underestimating AFDA could allow assets to be overstated.
We will assess this risk through analysis of estimates - looking for bias, inspection and vouching of unusual journal
entries, enquiry and observation of unusual conditions or actions
The main risk however, probably is employee fraud since SSL is an owner/managed business (so M. Silva would be
stealing from himself), but it is a cash business. Cash receipts could be misappropriated (e.g., by a lapping trick).
We can assess this risk by ‘thinking like a crook’ considering presence of fraud triangle factors and paying attention
to opportunities present to employees, and following up on any suspicions.
h. Two procedures for the high risk assertions for lease receivables:
Valuation
- analysis of estimate for AFDA
- vouching of lease receivables and payments to cash receipts, bank records, and lease contracts
- confirmation of a sample of new leases added in the year with customers
Presentation
- recalculation of lease accounting that supports information presented in financial statement notes regarding
expected valuation and expected cash inflows
- recalculation of current and long-term portions of leases
- analysis of lease contracts to ensure they are accounted for in accordance with GAAP as to whether they are
finance type or operating.
Another random document with
no related content on Scribd:
The Project Gutenberg eBook of Mehiläinen 1840
This ebook is for the use of anyone anywhere in the United States
and most other parts of the world at no cost and with almost no
restrictions whatsoever. You may copy it, give it away or re-use it
under the terms of the Project Gutenberg License included with this
ebook or online at www.gutenberg.org. If you are not located in the
United States, you will have to check the laws of the country where
you are located before using this eBook.
Title: Mehiläinen 1840
Editor: Elias Lönnrot
Release date: March 23, 2024 [eBook #73242]
Language: Finnish
Original publication: Helsinki: G. O. Wasenius, 1840
Credits: Jari Koivisto
*** START OF THE PROJECT GUTENBERG EBOOK MEHILÄINEN

1840 ***
MEHILÄINEN 1840
Toim.
Elias Lönnrot
Helsingissä, Präntätty G. O. Waseniuksen tykönä, 1840.
Imprimatur: H. Widenius.
MEHILÄINEN. W. 1840.
Tammikuulta.
MUUALTA LÄHETETTY.
Uusia Wirsiä, Kirkossa ja kotona veisattavia. Joita ensin Suomen

Papit, Ignatius, Frosterus, Helenius, Pesonius, Achrenius, ja muut
ovat kirjoittaneet; mutta sitten yhdistänyt, uudistanut, ja lisännyt
Arkki-Pispa vainaja Jak. Tengström, ja nyt Wirsi-Kirjan-Seurasto
pränttiin antanut. Ensimmäinen ja jälkimmäinen osa. Turusa, vuonna
1836 Frenckellin ja Pojan Kirja-painosa.
Kauvan on Suomalaiset olleet täydellisemmän Wirsi-Kirjan

puutteessa, joko, ei ainoastansa, selkeemmällä puheenparrella, kuin
nykynen Wirsi-Kirjamme, ilmoittais Evangeliumin puhdasta oppia,
mutta jossa myös olis Wirsiä muista tarpeellisista aineista kuin
nykysessä vanhassa Wirsikirjassamme löytään; täma puute on
huomattu, ja se on myös ollut Jumalan sanaa, ja yhteistä hengellista
parasta rakastavaisten Sielunpaimenten sydämmellä; heitin
yhteisestä toimesta ja työstänsä on nämät mainitut Wirret, präntin
kautta, annettu kunkin erinäiseksi, ja kaikkein Suomalaisten
yhteiseksi hengelliseksi hyödyksi. Ne on myös erinomattain
täysinäisen kielensä vuoksi parhaita, tähänasti painetuista
Suomalaisista Wirsistä. Mutta ne monet takaperoset sanat, jotka
näyttää ehdolla, vaston kielen luontoo ja tavallista puhetta olevan
kirjotettu takaperosiksi, on niin oudot korvalle, että, jos ei ne juuri
öksytä lukiaansa, niin ovat ne kumminkin häneltä työlläästi
ymmärrettävät, ja ainakin on ne oikeinpäin, luonnollisessa
järjestyksessänsä, paremmat, jonkatähden tähän pannaan
muutamia esimerkiksi, ja niitten selitys, niille tiedoksi, jotka ei
senlaiseen takaperoseen puheen luontoon (Renkoon) tottuneet ole.
N:o 552 v. 1 luetaan: "Hän Isän lyöpi vitsalla" olis paremmin

ymmarrettävä, sanojen luonnollisessa järjestyksessä, ja versyn-
rakennusta (meter) vahingoittamatta, sanottuna: Hän lyöpi Isän
vitsalla. N:o 1 v. 1 "Maan, Taivaan noskoot Luojalle," oikein päin:
Noskoot maan, Taivaan luojalle. N:o 2 v. 2. "Äänes kuulen jylinän",
oikein päin: Kuulen äänes jylinän.
Erilaita on niitten takaperosten sanojen, joita versyn juoksu, eli

laatu, vaatii semmoisiksi; esimerkiksi: viimmeksi mainitun virren
kolmann. versyssä seisoo: "Käskee teille Taivahan", ja N:o 4 v. 2
"Pukus säteet auringon", rikkois versyn luonnon, jos niitä oikeinpäin
sanottaisiin: Käskee Taivahan tielle, ja Pukus auringon säteet. Mutta
näistä edellä nimitetyistä, niinkun seuraavistakin takaperosista
sanoista, ei ole ollut versyn-rakennuksen apua, vaan pikemmin
pahennusta, ja ainakin ovat luonnottomat, niinkun jo sanottu on. N:o
162 on jambista versyn lajia, mutta ensimmäisessä versyssä 3:mas
rati alkaa daktylillä ja takaperosesti: "Kuoleman pääsi vallasta", jos
tässa olis kielen luontoo seurattu, niin olis versyllä oma jambinen
luontonsa, esimerk. Hän pääsi kuollon vallasta. N:o 34 alkaa
"Jumalan Herran ainoan kunnia olkoon aina"; tässä sanotaan
Jumalalla olevan Herra, mutta ei toivoteta: Jumalalle (taikka) Herralle
ainoalle kunnia olkoon aina. N:o 56 alkaa "Tuntos äänen koskas
kuulet", oikeinpäin: Koskas tuntos äänen kuulet. N:o 146 v. 6.
"Haudan nousit kammiosta", oikeinp. Nousit haudan kammiosta. N:o
149 v. 2 "Kuoleman vapaat vaarasta". oikeinp.: Wapaat kuoleman
vaarasta. 156 v. 2. "Heille vaan se omaksi". oikeinp. Waan se heille
omaksi. N:o 161 v. 2 "Jesuksen etsein ruumista", oikeinp. Etsein
Jesuksen ruumista. N:o 162 v. 6 "Hän suuren voitti kunnian", oikeinp.
Hän voitti suuren kunnian. N:o 166 v. 3 "Usiamman päätin kerran",
oikeinp. Päätin usiamman kerran. N:o 167 v. 1 "Uuteen nousit
elämään", oikeinp. Nousit uuteen elämään. N:o 180 v. 3 "Elämän
ruokkii leivälla", oikeinp. Ruokkii Elämän leivällä. N:o 317 v. 3 "JoS
epä-usko armos estää valon", oikeinp.: Jos epä-usko estää armos
valon. N:o 371 v. 2 "Surun näännyn vallasa", oikeinp.: Näännyn
surun vallasa. N:o 393 v. 5 "Isä suo rakas", oikeinp.: Suo Isä rakas.
N:o 442 v. 3 "Sen heille hyvyys Herran suo" oikeinp.: Sen heille
Herran hyvyys suo. N:o 474 v. 2 "Kansansa asuu seasa", oikeinp.
olis: Asuu kansansa seassa. N:o 476 v. 3 "Niin Taivaan voitan
palmun", oikeinp.: Niin voitan Taivaan palmun. N:o 512 v. 1 "Elämän
käymään teitä", oikeinp.: Käymään elämän teitä. N:o 513 v. 1 "Sun
käskyis käymään teitä", oikeinp.: Käymaän sun käskyis teitä. N:o
590 v. 4 "Isäs tunnet rakkauden", oikeinp.: Tunnet Isäs rakkauden.
N:o 64l v. 1 "Monen hän kerran", oikeinp.: Hän monen kerran. N:o
677 v. 3 "Ja teitä synnin seurataan", oikeinp.: Ja synnin teitä
seurataan. N:o 684 v. 1 "Taivaan nähdä kotomaan", oikeinp.: Nähdä
Taivaan kotomaan.[1] Nro 710 v. 1 "Ei kuollon päästä kädestä",
oikeinp.: Ei päästä kuollon kädestä ja paljo muita senkaltasia.
N:o 642 Sanotaan veisattavan kuin: O Jesu Kriste sä autuuden, ja

68 samalla nuotilla; mutta näitten virsien rakennus on peräti
erinlainen: Ensiksi mainittu virsi (642) on Daktylinen, 10 ja 9 tavausta
versyen ratisa; toinen (N:o 68) on Jambinen, 8 ja 7 tavausta ratisa.
Eikö olis luonnikkaampi, että kaikki yhdellä nuotilla veisattavat virret
olis yhtä versyn laija?
N:o 734 4:sä ja 5:sä versyssä on, ainoastansa, 8 ratia, mutta
edellisissä on 12; tietämätön on mistä näihin viimeisiin versyin
saadaan 4 puuttuvaista ratia?
N:o 148 v. 4 ja viidennestä radista puuttuu 1 tavaus ja N:o 258 v. 2

ensimm. rati samalla lailla; mutta seuraavaissa on yksi tavaus liiaksi.
N:o 122 v. 4 2 rati. N:o 255 7 v. 7 rati. N:o 586 4 v. 1 r. ja 601 3 v. 7
radisa.
Puolia, eli katkastuita sanoja on tyystin ja taiten kartettu; niitä ei

ole myös muuta kuin harvassa paikka joku sana ("Nuorna"),
esimerkiksi virsissä N:o 582 v. 1, 583 v. 5, 584 v. 4, 589 v, 4, 592 v.
1, 599 v. 8, 615 v. 1, ja 707 v. 3. Paitti näitä on koko kirja,
ylistettävästi, täydellistä ja selkeetä Raamatun Suomee,[2] ja
niinmuodon Suomen-maan joka paikkakunnissa, suomalaisilta
ymmärrettävä. Mutta, kaikki ei näytä hyväksyvän niin täydellistä
kieltä, ja puhdasta puheenpartta virsissä,[3] vaan pitäävat katkaistut
sanat niin tarpeellisina, ettei he ilman niitä sano saavan versyä
luonnistumaan, siitä syystä, että Suomen kielessä on vähän lyhkösiä
ja yksi tavaus sanoja. Mutta jos tätä asiaa tarkemmin tutkitaan, niin
huomataan piankin ettei katkastuista sanoista ole versylle apua, eikä
sitä luonnikkaammaksi auta; Roschierin ja Heleniuksen
Ruottinkielestä Suomentamat Wirsi-kirjat todistaapi tämän; sillä ne
on melkeen koottu katkaistuista sanoista, ja sentään taajemmassa
versyn-rakennuksen vikoja, kuin Wirsi-Kirjan-Seuraston virsissä.
Tähän otan esimerkiksi Roschierin "Psalmi-kirjan", ainoastansa,
ensimmäisestä Psalmista (virrestä); sillä ne seuraavaiset on kaikki
samallaisia, ja Heleniuksen on myös yhtäläinen: "Juur', häneen,
heill', tääl', niins, kaikk'." Kukin ajatteleva lukia näkee tässä, jos
nämät tavaukset on lyhkösiä, jotka lyhköseksi merkitty on. Sillä
nämät katkaistut sanat: Juuri, heille, täällä, kaikki, ja muut
senkaltaiset, ovat Trocheukset, niissä on pitkä ja lyhy tavaus; jos
niistä jätetään pois viimmonen tavaus, joka on lyhy, niin jääpi
kumminkin ensimmäinen tavaus, joka on pitkä, sanottavaksi, eikä
sovi lyhkösen siaan pantaa, niinkuin sanan-katkasiat on tehneet, ja
luulleet sen sillä lyhköseksi muuttuneen, kuin he viimmesen
tavauksen on pois jättäneet.
Senlaiset lyhennetyt sanat kuin: "Mulle, Sulle" joita löytään

Wirsikirjan-Seuraston Wirsissä ovat hyvät ja käpöset, jos ei niitä
enää lyhennetä niinkuin Rosch. ja Hel. on tehnyt 'Mull', ja Sull'.
Mitä Ruottalaisten uuden Wirsi-kirjan ja Suomalaisten Runojen

sanojen katkasemiseen tulee, niin löytyy niitä näissä molemmissa,
sangen harvassa paikkaa; tuskin on koko ensinmainitussa kirjassa
usiampia kuin R. ja H. joka virressä. Kullakin kielellä on oma
luontonsa ja vaatimuksensa, meitin ei tule suoria kieltämme muitten
kielien mukaan, vaan seurata sen omia vaatimuksia ja luontoo.
Waikka Suomalaisissa Runoissa onkin, harvassa paikkaa,
katkastuita sanoja jossa ei niitä myös tarvittaisi niin tiedämme ne
olevan Talonpoikasten tekemiä, joilta ei sovi parempaa vaatiakkaan;
mutta Oppineilta, joilla on taitoo ja aikaa tutkia kielen laatua ja
luontoo, on senlaiset, katkaistut sanat, kuin jo nimitetty on suuri
rikos.
Merkittävä on myös, että katkaistuilla sanoilla sanotaan virsi

saatavan hengellisestä hartaudesta rikkaammaksi kuin täysillä, joilla
sanotaan virsi tulevan kankeemmaksi ja hengettömäksi; mutta eikö
syy tähän luuloon lienee ainoastansa se, että Hengelliset virtemme
on tähänasti ollut katkaistuilla sanoilla kirjoitetut suureksi vahingoksi
kielellemme ja että korvat on niihin jo niin tottuneet, ettei
Hengellisempiäkän virsiä enää pidetä arvossansa, jos ei niissä
katkastuita sanoja löytä. Samalla lailla oli muinaan: koska
Paavilaisuuden aikana pidettiin Jumalanpalvelukset Latinan kielellä,
jota ei oppimaton seurakunta ollenkaan ymmärtänyt, ja kuin sitte,
Lutheruksen-Opin mukaan, ruvettiin maakunnan omalla kielellä
Jumalanpalvelusta pitämään, niin ei Seurakunta (ensimmältä) pitänyt
sitä enää siinä arvossa kuin ennen; juuri kuin Jumalan sana olis
senkautta pyhyydensä kadottanut, että sitä Seurakunnan omalla
kielellä juliistettiin, eikä latinan kielellä, jonka he luuli ainoastansa
olevan Jumalan sanalla pyhitetyn.
Jälkimaine. Waikkei kyllä tässä edellä luettava tutkinto olekkaan

täydellinen, joka vaan vaatisikin pidempätä kirjoitusta, niin panemma
mielellämme sen anomusta myöten Mehiläiseen, toivoen, että
usiampiaki löytyisi, jotka ilmoittaisivat ajatuksensa mainitusta uusien
virsien kokouksesta. Mitä Mehiläisessä löytyy tilaa, annamma
ainakin kernaasti semmoisiin tutkintoihin, koska tunnemma niiden
suuren arvon nykyaikana. Mitä tähän nykyiseen tutkintoon koskee,
niin olemma muutamin paikoin vähän eriajatuksesta tutkijan kanssa,
jonka vaan nimitämmä, hyvin tieten, itsekullaki löytyvän omansa.
Mehiläisen toimittaja.
[1] Sana, Koto-maa, näyttää olevan paremmin Suomenkielen

luontonen kuin "Isän-maa", jota nimee on paikottain tässä kirjassa
pruukattu, esimerkiksi: Wirsiä "Isän-maan rakkaudesta" j.n.e.
[2] Liiaksi näyttää, kuitenkin, tässä kielessä olevan ne, ei

ainoastansa joka virressä vaan myös melkeen joka versyssä löytyvät
kertomus sanat (pronomina). Esimerkin otan ainoastansa yhdestä
virrestä: N:o 36 v. 1 "Sun kiitostas me aina veisaamme" v. 2. "Ja
uhrimme Me sulle kannamme." Jos näistä versyista jätettäisiin pois
kertomus sanat "Sun ja Me", niin olis kieli luonnikkaampi, ja saatasiin
niitten siaan sovittaa tarpeellisempia sanoja.
[3] Tämä näkyy Turun ruottalaisista Sanomista nimeltä Åbo

Tidningar N:o 19 ja 20 1838. Jollenka vastaukseksi seuraava on
kitjoiettu.
KAIKENLAISIA.
Pilvien suuruudesta.
Moni pilvi liiatenki syntyessänsä ei ole, kun muutaman kyynärän

suuruinen; toiset päälle penikuormanki ja välistä on koko näkyvä
taivas yltä pilvessä. Pilvien suuruus on helposti arvattava varjosta
(kuvasesta), jonka allansa maalla tekevät. Korkioilla vuorilla, joiden
kukkurat pistäksen ylemmäksi pilviä (katso: Mehil. Elokuulta 1837),
taitaan pilvien paksuuski mitata. Eräät ovat ohuita hennukoita, toiset
satoja ja tuhansiaki kyynäriä paksut.
Maanviljeliöille.
Usiassa paikassa Franskan maalla kylvetään alkukesässä toukoja,

joista sitte 2 ja 3:ki kertaa niitetään karjanruokaa ja ehästään sillä
keinon tähkään pääsemästä. Wasta seuraavana vuonna annetaan
saman touon rauhassa kasvaa, joka joutuu ja valmistuu tavallisena
aikana leikattavaksi. Tästä viljelyskeinosta oli edellisenä vuotena
saatu karjanruoka melkein sulaa voittoa. Mahtaisko Suomessaki niin
menestyä?
Sateen paljoudesta.
Ilmasta alasputoava vuotinen vedenpaljous on suurin maan

keskiseuduilla ja vähenee sitä myöten, kun siitä tullaan likemmä
maan pohjais- eli eteläpäätä, s.t.s. lämpimämmillä maaseuduilla
alasputoaä vuosittain enempi vettä, kun kylmemmillä. Mutta peräti
vastahakaan on sade'päivien luku sitä suurempi, mitä kylmempi
maaseutu. Hispaniassa, Italiassa, Greikan maalla. Persiassa,
Arabiassa, Palestiinassa j.n.e. luetaan vuosittain keskikohtasesti 100
sade'päivää; Franskan maalla, Etelä-Saksassa, Hungariassa,
Pohjas-Turkissa j.n.e. 130 päivää; Englannissa, Pohjas-Saksassa,
Preusissa, Puolassa, Keski-Wenäjässä j.n.e. 160 päivää; Ruotsissa,
Suomessa, Pohjais-Wenäjässä, Lapissa j.n.e. vieläki usiampaa
sadepäivää. Ylisumman on kesäs-aikana alastulo suurempi, kun
talvis-aikana, vaikka luetaanki syys- ja talvis aikana enempi
sadepäiviä. Jos lumiki, mikä talvella sataa, sulattaisi vedeksi, niin
siitä kevät- ja syys-sadetten kanssa yhteenlukein ei kuitenkaan tulisi
paljo enempi vettä, kun mikä kesällä kolmena kuukautena (Kesä-,
Heinäja Elokuussa) yksinään sataa. Päiväs-aikana sataa aina paljo
enempi, kun yöllä, ja rakeita ei juuri muistella koskaan yöllä
sataneen. Muuten sataa vaaramailla (vuorisilla seuduilla) enempi,
kun tasasilla eli alhasilla mailla; ja jos yhdessä kohtiki asetetaan
yhtäsuuret astiat, toinen korkialle katolle, toinen pihalle, niin
kokoutuu katolla olevaan astiaan enempi vettä.
Tuulten kulusta.
Kevyt, vaivon havattava tuuli, kulkee tiimassa puolentoista

Wenäjän virstan paikoilla; kohtalainen tuuli penikuorman; rajutuuli
kolmesta niin kuuteenki penikuormaan; myrsky kahdeksan
penikuormaa, ja tuulispää, semmoinen, joka kukistaa huoneita ja
tempaa maasta puita juurineen matkaansa, kulkee kaksitoista
penikuormaa tiimassa. Ilmalaivoilla kulkiat ovat havanneet, että
korkiammalla ilmassa useinki tuuli puhaltaa vastoin sitä tuulta, joka
alempana käypi. Jäämerellä ajelehtii halki kesän suuria
suunnattomia jäätönkäleitä ja purjehtiat kertovat niistäki moniaiden
kiireesti vaston tuulta kulkevan, koska toiset liikkuvat tuulen mukaan.
Syy tähän kummitukseen sanotaan olevan se, että kun
vedenpinnassa aalto käypi tuulta myöten, syvemmässä vesi taas
virtoisi jälelleen vaston tuulta täyttämään sitä lomaa vedessä, jonka
poisaaltoava vesi jälkeensä jätti. Tämä syvemmässä käyvä virta
kuljettaisi myötänsä ja vaston tuulta niitä jäätönkäleitä eli jäävuoria,
jotka painonsa suhteen ovat syvemmässä ja toiset, jotka eivät painu
niin syvään, menisivät tuulen mukaan. Tätä oppineilta mietittyä
selityslaatua emme kuitenkaan pidä tyydyttäväisenä. Sillä kun tuuli
kuljettaisi muutamia, alusvirta toisia jäävuoria, niin pitäisi
välttämättömästi niiden välillä löytyä eräitä, jotka pyörisivät ympärite
paikaltaan liikkumatta. Mutta onko semmoisia? — Myös pitäisi
samaa selityslaatua myöten pienempien jäävuorien kulkea tuulen
mukaan, suurempien vaston tuulta; mutta tapahtuuko sillä tavalla?
— Kaikissa virroissa erotetaan pääväylää alasjuokseva ukonvirta
sen vieriltä ylösjuoksevasta ämmänvirrasta. Eikö liene sama syy
jäävuorienki kahtalaiseen kulkuun Jäämerellä, kun vedenki virroissa
kahtalaiseen, toinen toistansa vastahakaseen juoksentaan? — Ja
olkoonpa kuinka tahansa, niin ainaki sanovat olevan hyvin oudon ja
kummittavaisen Jäämerellä katsella, kuinka jäävuorista yhdet
juoksevat peräsukaa sinne, toiset rientävät tänne aivan vastahakaan
niiden vieressä kulkevien suuntaa ja retkeä.
Liikkuvista pyhistä vuodessa.
Uusissa almanakoissa katsotaan ainaki ensimmäiseksi, mihen

aikaan ne liikkuvat pyhät, Laskiainen, Pääsiäinen ja Heluntai
lankeavat. Kun kellä ei ole almanakkaa, niin useinki täytyy mennä
muilta kysymään näiden pyhien aikaa ja tulevista vuosista on työläs
kysymälläkään tietoa saada. Waan kun yhdenkään näistä liikkuvista
pyhistä tietää, niin huokiasti saa niistä toisistaki tiedon, koska niin
Laskiaisen ja Pääsiäisen, kun Pääsiäisen ja Heluntain väliä on täysi
seitsemän viikkoa. — Joksiki hyväksi lukioillemme panemma tähän
kahdenkymmenen seuraavan vuoden Pääsiäiset. Tänä vuonna
(1840) on Pääsiäispäivä 19 päivä Huhtik. ja siitä lähtein:
1841 se 11 Huhtikuussa. 1842 — 27 Maaliskuussa. 1843 — 16

Huhtikuussa. 1844 — 7 Huhtikuussa. 1845 — 23 Maaliskuussa.
1846 — 12 Huhtikuussa. 1847 — 4 Huhtikuussa. 1848 — 23
Huhtikuussa. 1849 — 8 Huhtikuussi. 1850 — 31 Maaliskuussa.
1851 — 20 Huhtikuussa. 1852 — 1l Huhtikuussa. 1853 — 27
Maaliskuussa. 1854 — 16 Huhtikuussa. 1855 — 8 Huhtikuussa.
1856 — 23 Maaliskuussa. 1857 — 12 Huhtikuussa. 1858 — 4
Huhtikuussa. 1859 — 24 Huhtikuussa. 1860 — 8 Huhtikuussa.
Niillen, jotka halunnevat tietää minkä vuoden Pääsiäisen tahansa

ja osaavat ne neljä tavallisinta laskukeinoa (k. Mehil. m.v.
Maaliskuulta), saamma neuoksi antaa, että Pääsiäispäivä kunaki
vuonna helposti löytään seuraavalla tavalla: ala jakaa itse saman
vuoden
Wuosiluku jakimella 19, merki viimeksi ylijääpä a.
Sama luku — 4, — — — b.
Sama luku — 7, — — — c.
19 x a + M — 30, — — — d.
2xb+4xc+6xd+N — 7, — — — e.
Niin on Pääsiäispäivä sinä päivänä Maaliskuussa, joka saadaan,

kun ne luvut, mitä d ja e merkitsivät, ja luku 22 luotetaan yhteen.
Mutta jos Summa näistä Luotoksista kasvaa suuremmaksi, kun 31,
niin otetaan Summasta pois 3l ja Jääpä merkitsee, minä päivävä
Huhtikuussa Pääsiäisväivä tulee. Muistettava on, että tässä laskussa
M ja N merkitsevät lukuja, joilla on seuraava arvo: kaikissa
vuosiluvuissa siitä ajasta asti, jona Uusi Luku keksittiin, taikka
Alkain 1582 lopettain 1699 merkitsee M 22, N 3. — 1700 —

1799 — M 23, N 3. — 1800 — 1899 — M 23, N 4. — 1900 —
1999 — M 24, N 5. — 2000 — 2099 — M 24, N 5.
Myös on muistettava, että jos Pääsiäinen tätä laskua myöten tulisi

olemaan sinä 25 eli 26 päivänä Huhtikuuta, niin muuttuu se 7 päivää
ylemmäksi, taikka siksi 18 ja 19 päiväksi samaa kuuta. Wielä seki on
muistettava, että Ruotsissa ja Suomessa vastoin tätä muussa Uuden
Luvun seuraajassa Euroopassa tavallista laskua. Pääsiäinen
vuosina 1845, 1869, 1900 tulee yhtä viikkoa myöhemmin
vietettäväksi, taikka se 30 Maalisk., 4 Huhtik., 22 Huhtik. sen siaan,
kun muualla se 23 Maalisk., 28 Maalisk. ja 15 Huhtikuuta.
Jos nyt tahdot tietää Pääsiäispäivän v. 1840, niin jakaa
esinnä 1840 jakimella 19 ja kirjota jääpä a s.o. 16.

— 1840 — 4 — — — b — 0.
— 1840 — 7 — — — c — 6.
19x16+23 s.o. 327 30 — — — d — 27.
2x0+4x6+6x27+4 190 7 — — — e — 1.
Sitte luota yhteen d + e 22 s.o. 27 + 1 + 22, josta saat Summan

50, josta 3l pitää pois ottaa, että jääpi 19, joka merkitsee Pääsiäisen
lankeavaksi sinä 19 p. Huhtikuuta. Jos summa 50:nen siasta olisi
tullut 31 eli joku vähempi luku, niin olisi se suorastaan Maaliskuun
päivän merkinnyt, jona Pääsiäinen siinä tilassa olisi ollut vietettävä.
Wenäjän ja muun vanhan luvun seuraaja Pääsiäinen saadaan

samalla tavalla tietä, kuu vaan muistetaan, että siinä M aina
merkitsee 15 ja N aina 6. Muut pyhät niinkun Joulu, Uusivuosi,
Maaria, Juhannus j.n.e. ovat seisovia, ettemme niistä huoli mitään
kirjottaa.
TYTTÖIN LAULUJA.
Inka.
Ei oo sia surunen meiän majassamme;

Päivät kuluu kunnialla, illat aitassamme.
Pojat käyvät kulkemahan illan pimiällä.
Laulellen ja rallatellen ilovirsiänsä.
Illan tullen näille maille pojat kylihin kulkee;
Likat menee aittahansa, oven kiini sulkee.
Käykää pojat kylissä, vaan elkää menkö saunaan;
Pienet piiat pirtissä paljo teille nauraa.
Elsa.
Puhun minä poikasille, eipä houkutella

Nuoria likkoja tarvitseisi, eikä viekotella.
Leskiä saapi liikutella, ei se haittaa mitään;
Ei saa tyttöhin koskea; hävetä poikiin pitää.
Eipä tämä tyttö lähe hylkypojan viereen;
Hylkypoika viettelee ja saattaa mierontielle.
Poika rahat menettävi olvehen ja viinaan,
Tytöt ei pane rahojaan, kun silkkihin ja liinaan.
Kyllä sinäki tyttöjä saisit, saisit vaika kenen,
Kun olis viina loppunut jo viittä vuotta ennen.
Kaisa.
Laulaisinpa taitaisinpa kun palkka maksettaisi;

Emmä paljo pyytäiskään, kun markan sanasta saisin.
Ei ole tyttöin ikävä pimeillä öillä.
Pojat käyvät kyliä myöten tyttöin tinkitöillä.
Tuli poltti Turun linnan, vesi vei sen sillan.
Pojat itkee ikävissään päivän sekä illan.
Likka käypi kankahalla, niinkun kaunis kukka,
Poika juoksee jälestä, niinkun vanha hukka.
Likka astuu ahoa pitkin, pumpuliliivit liuhkaa,
Poika ryömii jälessä, tuohivirsut viuhkaa.
Likka istuu linnassansa, kulta rippuu rinnassa;
Tänä vuonn' on huonot pojat huokiassa hinnassa.
Anni.
Woi minä polo likka, kun ma olen yksin!

Olen tullut kaikilta hyljätyksi.
Muut tytöt toimittivat asiansa ennen,
Minä olen heitetty ikävihin tänne.
Enkä tieä miten minä hylyksi nyt tulin,
Joka ennen kaikkien kukkana kulin.
Olin minä ennen, kun enkeliskukka
Kehnojen päällen en katsonu'kaan.
Parahinten parvessa kävin minä kirkkoon,
Jo nyt olen joutunut koiarien joukkoon.
Waan mitä entisistä ajoistani huolin? —
Noitapa muistaissa syämeni kuoli.
Syän ompi kylmä kun syksyinen jää,
Ei sitä rakkauskaan lämmitä.
Leena.
Minä olen kainu, kun syvän salmen siika,

Murehella täytetty pienonen piika.
En vielä muistane kovin monta vuotta,
Walitella täytyy jo kuitenki totta.
Maailman meri se on vaarallinen aivan,
Pian myrsky särkevi pienosen laivan.
Ei aina käynti ole kukkien päällä,
Toisin ajoin ompi orjantappuria tiellä.
Wälistä se näyttää, kun ilonen ois' olla,
Usiammin taitavi mure'pilvi tulla.
Niin on koko elomme ja koko olo täällä,
Lehenkanta katkeava syksysellä säällä.
Omp' on elo ihmisten, kun aaltosien veellä,
Yksi tulee jälessä ja toinen meni eellä.
Nuoruuteni aika ja ilopäivä kulkee
Jopa noista vaivoista väsymyski tullee.
Waan kun olen nuori ja ruumihilta raitis,
Mahan olla luojoani kiittämähän valmis.
Luojoansa kiittävi varpusetki pienet;
Enkö toki varpusia parempi mä liene.
Sanna.

(Download PDF) Auditing Canadian 7th Edition Smieliauskas Solutions Manual Full Chapter

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

(Download PDF) Auditing Canadian 7th Edition Smieliauskas Solutions Manual Full Chapter

Uploaded by

Copyright:

Available Formats

Auditing Canadian 7th Edition

Smieliauskas Solutions Manual

Auditing Canadian 7th Edition Smieliauskas Test Bank

Auditing An International Approach 8th Edition

Auditing an International Approach 6th Edition

Auditing an International Approach 5th Edition

Auditing and Assurance Services 7th Edition Louwers

Auditing A Practical Approach Canadian 2nd Edition

Auditing Cases An Interactive Learning Approach 7th

Auditing and Assurance Services In Australia 7th

AUDIT EVIDENCE AND ASSURANCE

SOLUTIONS FOR REVIEW CHECKPOINTS

8-3. Auditors’ six main types of evidence gathering techniques are:

8-24 Auditors can help the effectiveness of confirmation requests by:

8-26 Analysis is used at:

8-27 Information sources for analysis include:

8-43 In the permanent audit file:

SOLUTIONS FOR MULTIPLE CHOICE QUESTIONS

SOLUTIONS FOR EXERCISES AND PROBLEMS

EP8-1 Audit procedures

Types of procedures used by auditors in general, with examples:

EP8-2 Potential Audit Procedure Failures

EP8-3 Confirmation procedure

b) The two main characteristics a confirmation should possess are:

EP8-4 Audit Procedure Terminology

1. Scanning for debit balances in accounts payable

EP8-5 General Audit Procedures and Financial Statement Assertions

General Audit Procedures Related Management Assertions

1. Recalculation Existence, Valuation

2. Physical observation Existence, Valuation

3. Confirmation Existence, Rights (Ownerships)

4. Verbal inquiry All assertions: however, responses typically yield more

5. Examination of documents Existence (vouching direction)

6. Scanning Raises questions that may be relevant to all objectives, but

7. Analytical Procedures Existence or occurrence

EP8-6 Relative Appropriateness of Evidence

EP8-7 Relative Appropriateness of Evidence

2. 1. Mathematical (based on c. Audit computation of expense

EP8-8 Audit Working Papers

EP8-9 Audit procedure for error detection.

a) Sales are understated, A/R are understated.

d) Accounts receivable turnover with error

EP8-10 Identifying the type of audit procedure

EP8-11 Information sources and reliability of evidence

SOLUTIONS FOR DISCUSSION CASES

DC8-1 Financial Assertions and Audit Procedures

DC8-2 Financial Assertions and Audit Objectives

DC8-3 Appropriateness of Evidence and Related Parties

DC8-4 Audit Plan with Weaknesses in Revenue Controls, Not-for-Profit Auditee.

Understanding the auditee and its risks

Substantive tests of details of transactions and account balances

DC8-5 Working paper review

a) The following information is missing:

b) The following procedures were not noted as having been performed:

DC8-6 Comprehensive Audit Planning Case

Is the financial condition good?

Evaluation of audit firm’s independence

Does audit firm have competency and resources to do an effective audit?

b) Calculate net income from trial balance data

Take 5-10% to provide a preliminary range of $125 to 250K

business objectives - grow sales, maintain premium pricing position

Assertions- Consider the following risk assessments with supporting reasons

DC 8-7 Comprehensive Audit Planning case