• Create a scenario in which a company conceals financial fraud from the auditing firm through the use of information technology, and suggest at least one (1) way in which an auditing firm can minimize its exposure to this risk.
• Planning an audit involves establishing the overall audit strategy for the engagement and developing an audit plan in an attempt to reduce audit risk to an acceptable level. Select a balance sheet account or income statement account, and discuss the type of audit procedure that would produce the most reliable evidence for that account balance. Defend your position.
• Imagine that you have been hired to audit the sales and collections of a medium to large merchandising company. Suggest at least two (2) ways that management could manipulate earnings, and make specific recommendations for the internal control procedure to prevent or detect the transaction. Justify your response.
• Discuss the advantages and disadvantages of at least two (2) sampling methods. Make a recommendation for the best method to sample accounts receivables. Support your position.
• To minimize the risk of material misstatement, auditors seek third- party verification of account balances by mailing customers their statements. Discuss the advantages of positive and negative confirmations, and ascertain whether or not email and oral confirmations are acceptable to increase customer response rates. Support your position.
• Discuss the difference between substantive test of transactions and substantive test of balances, and identify at least two (2) situations when an auditor should test account balances. Support your rationale with related examples of such circumstances.