ACC 693 Chapter 8 Quiz Note: The material contained within these pages is taken directly from your textbook, Computerized Auditing Using ACL Data
ACC 693 Chapter 8 Quiz
Note: The material contained within these pages is taken directly from your textbook, Computerized Auditing Using ACL Data Analytics. Alterations were made only for formatting and the omission of specific questions.
Reference
Arens, A. A., Elder, R. J., &Borsum, C. J. (2013). Computerized Auditing Using ACL Data Analytics. (3rd ed.). Okemos, MI: Armond Dalton Publishers, Inc.
Assignment#1
Simpson Company: Using ACL in the Audit of the Sales and Collection Cycle – Part 2
Answer all parts of these requirementson this page through page 8-11. It is more convenient to completethe assignmentif you remove pages 8-5 through8-11 now.
You are assignedto audit of the sales and collectioncycle for SimpsonCompany that is included in threeparts:
Chapter 7 Part 1 – Planningthe audit of the sales and collection cycle. Ifyou have not completed this part do so before continuing with Part 2.
Chapter 8 Part 2 – Tests of controls and substantivetests of transactionsin the audit of sales, payments,and other cred its
Chapter 9 Part 3- Tests of the year-endbalance of accounts receivable
Complete the following requirements using ACL:
Q 1. You are concerned that some of the amounts for each of the four transaction types may be misclassified as a negativewhen they should be a positive, or vice versa. First decide which transaction types should have positive amounts and which ones should have negative amounts. Then determine if there are any misclassifications.List any transactions that aremisclassified. (Hints: Use a separate filter for each of the four transaction types. It is not necessary to create any new tables.)
Q 2.Account for all document numbers for each of the four transaction types and list all duplicates and missing document numbers, if any. The beginning and ending document number for each type was provided by accounting and is as follows:
Beginning Ending
| Sales invoices | 87911 | 88723 | |
| Payments from customers | 64260 | 64675 | |
| Credit memos | 2614 | 2734 | |
| Write-offs | 36 | 36 |
Q 3. Determineif Simpson follows their established policy for the due date for payment for each salestransaction.Simpson’s policy is that the due date forpaymentis 30, 60,or 90 days fromthe billing date,dependingon the volume of business that the customerdoeswith Simpsonin the previousyear.For customerswith annualsales of less than $100,000payment is due in 30 days, from $100,000to$200,000 paymentis due in 60 days, and over $200,000 paymentis due in 90 days.You believe the 2014 sales amountsaresimilarto thosein thepreviousyears so you should use those amountsto determine whetherthe policy is being followed for each customer.
Q 4. Determine if any customer’s accountsreceivable balance exceeds the credit limit for that customer in the master file table. List the customernumber, accounts receivable balance,and creditlimit for those that do.
Q 5.Determine the two largest transaction a mounts for each of the four types of transactions (for transaction types with negative balances use absolute values). Identify any that are significant enough to warrant further testing by examining supporting documentation.
Q 8.Because one of the tests to be performed on sales involves is considered particularly important, thein-chargeasksyoutodeterminethesamplesizeassuminga confidence level of 95%, and an upper errorlimit of 6% (the expected errorrate remains zero). Calculatethe revised sample sizeand explain the result compared to your answer for Question 7.
Assignment #2
Jaysberg Electric: Using ACL in the Audit of Accounts Receivable Transactions
Answer all partsof these requirementson this page through page 8-23. It is more convenient to completethe assignmentif you remove pages 8-15 through 8-23 now.
Youareresponsibleforperformingtestsofcontrols and substantive testsof transactionsfor sales and salesreturnsand allowances in the audit of JaysbergElectric Co.forthe yearended12/31/14. You willbeusingACL to do asmanyaudittests as possible. You will be using three tables already included for the Jaysbergproject: Jaysberg_Auth_Prices,Jaysberg_Sales_Returns,andJaysberg_Sales_Trans.You will also be using the table of authorizedprices. The headings for each table are sufficiently descriptive for your understanding.
Complete the following requirements using ACL:
For each requirement include the correct answer or exception(s) that you found and otherinformationreferred to in the question.
Q 1.Perform Verify and Count commands for all three tables and identifyany exceptions.
Q 2.Test the accuracyof the monthlypostingsto the generalledger.Notethat the table includes a month code.Monthlysales per the generalledger areprovided below.
| January | $283,329.37 | July | $ 44,668.29 |
| February | 105,863.36 | August | 11,811.15 |
| March | 44,842.76 | September | 141,178.84 |
| April | 249.48 | October | 658,064.64 |
| May | 189,390.87 | November | 601,760.99 |
| June | 133,752.33 | December | 404,044.14 |
Q 3. Performthe followingtests of controls.For each controlstatethe commandor commandsthat you did to test the control and the results of the test.
a. Documentnumbers for all documentsare accountedfor periodicallyto make sure there are no duplicates or omissions.
Control(s):
Result(s):
b. Theunit cost of each product should be no more than 80% of the unit selling price.
Control(s):
Result(s):
c. All shipmentsare billed within four days of the shipping date.
Control(s):
Result(s):
d. No individualsale is to exceed $150,000.
Control(s):
Result(s):
e. No credit memo for a sales returnis more than 60 days afterthe sale.
Control(s):
Result(s):
Q 4.Performthefollowingsubstantivetestsoftransactions.Foreach substantivetest,statethe commandorcommandsthat you didtotestthe amountsand the results of the test.
a. Determinethat there is a shippingdocumentnumber for every sales invoice number.
Command(s):
Result(s):
b. Determinethetwo productnumberswiththe largesttotaldollarsalesfor subsequentfollow-up to verify the selling prices and quantitiesshipped.
Command(s):
Result(s):
c. Determinethe two productnumberswiththe largestunit sellingprices for subsequent follow-up to verify the unit selling prices.
Command(s):
Result(s):
d.Comparetheauthorizedpricestotheunitsellingpricesonthesales transactions list.
Command(s):
Result(s):
Q 5.Stratify the sales transactions. Identify and list large transactions that you believe should all be verified by examining supporting documents.
Command:
Table:
Assignment #3
Stabler Services: Using ACL in the Audit of Acquisitions Transactions
Answerall parts of these requirements on this page throughpage 8-31. It is more convenientto completethe assignmentif you remove pages 8-27through8-31 now.
Stabler Servicesis a privately held services company located in Minneapolisthat providesconsultingservicesand conferencesfor smallbanksin the U.S. and Canada needingexpertisein managingtheir banks. TMbusiness has nine departments that are all in one location.Department 1 is the administrative department and is responsible for making surethe consultingand conferencedepartments are able to operateeffectively. Department 3includesonlypart-timesalespeoplewhotravelawayfromMinnesota to attractnewbusiness.Theotherseven departments eachoffera differenttypeof service,but they each provide both consultingand conference services.Conferences are an essentialpart of the business because a conferencefee is chargedto each participant, whichisamajorsourceofrevenueforStabler.Conferenceinformationis alsothe primaryway that departments solicit business.
You are auditingacquisitionsfor the year ended12/31/14 and will be using three files that are alreadyincluded in ACL in the Stabler Serviceproject as tables. The tables are as follows, with informationprovidedby the IT department in parentheses:
• StablerAcquisitions2014 (320 records; total of invoices amounts $1,128,744.09)
• Stabler_Chart_of_Accounts (20 records; only for acquisition-related accounts)
• Stabler_ AP_Master_File (55 records)
Complete the following requirements using ACL:
Q 2. Use the Statistics command and list any information that appears unusual or you believe should be investigated further.
Q 3.Determineif there are any missing vouchers or duplicate numbers.
Q 4.Use Join orRelationsto determinethe accountname for each chartof account numberintheStabler_Acquisitions_2014table.Dothefollowingusingthe combined table. For each one, state any concernsthat you have for potential misstatements:
a. Review the account names and identify any monthly expense that is likely to be the same or similarand determineif the amountsare reasonable.
Account #:
Concern(s):
Account #:
Concern(s):
b.Evaluate whetherthe expenses chargedto Department 1 are reasonable.
Account #:
Concern(s):
c.Evaluateif an expense charged to other departments should have been charged to Department1.
Account #:
Concern(s):
Q 5.Review and evaluate the expenses for each department. Based on your evaluation identify any transactions you believe should be furtherinvestigated.
Q 6.Determine if all vendor numbers included in the Stabler-Acquisitions-2014 table are also includedin the Stabler_AP_Master_File table.
Q 8. Which two vendors doesStabler dothe most business with? Doesthis seem reasonable for the nature of their business?
Assignment #4
Eastland Publications: Using ACL in the Audit of Payroll Transactions
Answerall parts of these requirements on this page throughpage 8-37. It is more convenientto completethe assignment if you remove pages 8-35 through 8-37now.
You are assignedto the audit of salary and bonus disbursements for Eastland Publications for the quarter ended 12/31/14. Eastland is a medium-sized publisher of technical journals for a wide variety of industries. Eastland employs approximately 200 salariedprofessionals, andno hourly employees.Eachemployeeworks in one of six departments related to one or two industries.The company was startedin 1999 by John Lawson who is still president and chairman of the boa rd. It has grown steadily since then by aggressivelyseekingnew journalsto publish and deliveringquality publications on time every month. Experiencedemployees are well paid relative to competing companies intheindustryandworkingconditionsa re excellent,resultinginlowturnoverand experienced people.
Startingin May 2014 the companystarteda newprogramthat hi res entry level liberalarts graduatesdirectlyfrom colleges and universitieswho have the potentialto develop into competent journaldesigners and editors.Each of these employees starts on the first day of the month and immediately begins an extensive training program to learn the way Eastland publishes.
All employeesa re paid one-twelfthof theirannual salarymonthly, at the end of the month. Withholdingsfor taxes follow governmentrequirements and vary depending on the salarylevel and numberof dependents. Combinedwithholding percentagesare included in the pay roll masterfile. In additionto the annualsalary, most employees a re paid an annual bonus in Decemberbased on a percentageof their annual salary decided by theboard of directors.All employeesreceivethe fullbonuspercentregardlessof their startd ate, as long as theywere still employed at December31. Traineesare noteligible for a bonus. The approvedbonus percent is included in the payroll master file.
You are assignedto auditthe salary payroll fortheyearended12/31/2014,but you will be testing only the last quarter’s pay. You will be using two payroll Excel fi les that are included in the Eastland project.The payroll transactionfi le includes all salary transactionsfor Octoberthrough December,includingthe annual bonus.Thepayroll mastertable includes all employees who were employed at 9/30/14 plus those who were hiredduringthe lastthree months of the year. Informationaboutthe recordsin each table was provided by the IT department and is included with the description of the files:
Eastland _Payroll_Transfile (753records; $4,928,955.56 Gross Pay)
Eastland-Payroll-Master file (200 records; $12,127,375 Salary)
Complete the following requirements using ACL:
Q 1. Determine that the record count and totals for the two tables are consistentwith the informationprovided by the IT department.
Q2. Determinethat all employees on the Eastland- Payroll- Transtable are included in the EastlandPayrollMastertable.
Q 3. Determinethat employees hired on November 1 and December1 were paid only for the months they were employed.
Q 4. Comparethe monthly salary for each month on the payroll transactiontable with informationin the payroll mastertable.
Q 5. Determineif the Decemberbonus payment for each employee is consistentwith the policy establishedby the board of directors. Employeeswho earnless than$40,000 are traineesand do not receive a bonus.
Q 7. Account for all check numbersissued duringthe periodincludingboth missing checknumbersandduplicates.Thefirstchecknumberissuedin Octoberwas65785 and the last one issued was 67537.
Q 8. Comparetotal salaries,not including the Decemberbonus,for each department and assesswhetherthe amountsappearreasonable.
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