Solved by verified expert :1. (TCO E) A Remington School District employee has been charged with theft and forgery for allegedly stealing approximately $72,000 in district funds.Mary Blaner, 51, was charged in District Court with one count of second-degree felony theft and five counts of third-degree felony forgery. She is the second school district employee to be formally charged with stealing from the district. Both individuals were charged in separate and apparently unrelated cases.Blaner, who was the district’s payroll clerk, allegedly arranged electronic direct deposits of funds for nonexistent employees that then went to her, according to the police. Blaner was a trusted employee who had worked at the district for over 10 years. (Note: she just went through a divorce and has 4 children to support. She needs money for her children and a new car and had plans to pay the money back later).”Over the course of the last 15 months, she was able to allegedly siphon funds out of their (the district’s) account into her account, and she allegedly set up fictitious employees,” School district officials became suspicious when they had trouble balancing the district’s account. After an internal audit, school officials came across payroll listings for workers that did not have any matching Social Security numbers.Another school district employee, Cindy Heap, who formerly worked as an elementary school secretary, earlier was charged with theft and 11 counts of forgery in a different case, according to Gary Searle, deputy county attorney. Heap allegedly took just under $90,000 in district funds, Searle said. Heap, 32, resigned from her job.(1) What factors allowed these frauds to occur?(2) What do you think the school district should do in the future to prevent fraud from occurring in the future?(3) What responsibility do you feel the current school external auditor has to detect this fraud?(4) How have the three elements of the Fraud Triangle enabled Mary to commit this fraud? (Points : 30)Question 2. 2. (TCO G) Conducting an audit in accordance with Generally Accepted Auditing Standards requires that the audit is properly planned, performing preliminary upfront analytical procedures, assessing the clients business risk and making sure that the auditors understand the client’s business and industry.(a) Identify and describe at least three aspects of proper audit planning and why they are important.(b) Define what an analytical procedure is and give at least three procedures that should be performed and their purpose. For example, comparison of last year’s Allowance for Doubtful Accounts to this year’s Allowance for Doubtful accounts – the amount has decreased by 25%, while sales have increased by 10% from last year. How might this affect how you look at Accounts Receivables and the related Allowance for Doubtful Accounts? Would you increase or decrease your audit procedures?(c) Why does an auditor need to understand the client’s business and their industry? Provide an industry and what risks may that industry pose to our client. (Points : 30)Question 3. 3. (TCO H) One objective of audit of a water utility for a small city is to determine whether all customers are being billed. Select the best “direction of testing” from the options below and explain why you selected that option.(a) Meter Department records to the sales register.(b) Sales Register to the meter department records.(c) Accounts receivable ledger to the sales register.(d) Sales Register to the Accounts receivable ledger (Points : 30)Question 4. 4. (TCO I) Auditing standards define a confirmation as the “process of obtaining and evaluating a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.” What are the two assertions for which confirmation of accounts receivable balances provides primary evidence. Select one of the below options and EXPLAIN your reasons why you selected that option.(a) Completeness and Valuation(b) Valuation and Rights and Obligations.(c) Rights and obligations and existence.(d) Existence and Completeness (Points : 30)Question 5. 5. (TCO J) (1) Identify the Processing Controls associated with a Computerized System and identify the types of tests to be performed. (2) Identify the issues which an E-Commerce System presents for an auditor. (Points : 30)Question 6. 6. (TCO K) When considering the use of Management’s written representations as audit evidence about the completeness of an assertion, an auditor should understand that such representations – select one of the answers that best completes this sentence and explain your response:(a) Constitute sufficient evidence to support the assertion when considered in combination with a sufficiently low assessed level of control risk.(b) Complement, but do not replace, substantive tests designed to support the assertion.(c) Are not part of the evidence considered to support the assertion.(d) Replace a low assessed level of control risk as evidence to support the assertion. (Points : 30)1. (TCO A) You have been hired by a Regional CPA firm to perform audits on their largest clients. Explain what Standards of Field work you would be required to adhere to and why. (Points : 19)Question 2. 2. (TCO B) When a CPA performs an Audit the Client is always looking to receive a “CLEAN OPINION” or an Unqualified Opinion. Explain what your client must do for a CPA to justify that Unqualified Opinion? (Points : 19)Question 3. 3. (TCO C) Kent, CPA is a staff auditor participating in the audit engagement of Fort, Inc. Based upon each of the circumstances below, indicate whether or not Kent’s actions impair his independence. Explain your response for each situation:· Kent’s friend, an employee of another local accounting firm, prepares Fort’s Tax return.· Kent’s sibling is the director of Internal Auditing for Fort, Inc.. (Points : 19)Question 4. 4. (TCO D) Discuss five steps individual practicing auditors can take to minimize their legal liability. (Points : 19)Question 5. 5. (TCO F) Sarbanes Oxley requires that per Section 404 that Internal Controls within a publicly held company are to be reviewed, evaluated and tested at year end to insure that adequate controls are in place. In addition to understanding the Internal Controls present within your client’s company, the auditor must also evaluate whether these controls are in place, and implemented. How does an auditor evaluate these controls to see that they are working and in place? (Points : 19)
Expert answer:ACC – A Remington School District
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