Question 29. The level of uncertainty in the audit evidence obtained can be accepted because:
A. In auditing, it is only necessary to collect conclusive audit evidence
B. Can combine audit evidence from many different sources
C. Cost of checking all items, especially checking operations
Regularly is generally not economical
D. Both B and C are correct
Question 30. Mistakes in asset value in the balance sheet are considered immaterial when:
A. Less than 1%
B. Below 5% C. From 5-15% D. From 15-20%
Question 1. During the audit process at Hoang Ha Co., Ltd., the auditor discovered some bookkeeping transactions in year N as follows: (Unit: 1000 VND)
On February 1, warehousing of raw materials that were in transit last month, the value of raw materials at the price excluding VAT is 60,000, VAT rate is 10%, the purchase price of raw materials has not been paid to the customer.
Debit Account 152: 60,000
Debit Account 133: 6,000
Credit account 331: 63,000
On February 6, purchased a piece of machinery and equipment for the production department at the purchase price excluding VAT of 410,000, VAT rate of 10%. Paid to seller by bank transfer.
Know that this asset is invested from a development investment fund
Debit Account 2411: 410,000
Debit Account 133: 41,000
Account 112: 451,000
On February 23, 2,000 products were released and sold to Tien Dat Joint Stock Company, the ex-warehousing unit price was 45/product, the selling price excluding VAT was 50/product, the VAT rate was 10%. Shipping costs according to the contract must be borne by the business according to the total payment price of 4,400 (tax included).
VAT is 400), paid in cash.
Debit Account 157: 90,000
Account 156: 90,000
On February 25, liquidation of a piece of production equipment, raw
Debit Account 214: 200,000
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Price 250,000, accumulated depreciation 200,000. Lung
Debit Account 811: 50,000
Selling data for cash is 16,800 (price included
Credit account 211: 250,000
including VAT, know the VAT rate
5%).Liquidation costs are 1,000, paid in cash.
Request: Please detect possible errors in operations and make adjustments according to the current accounting regime. State the affected assertions of related items?
Question 2. When planning a financial statement audit, auditors must understand audit risks and the types of risks that constitute audit risks .
Required: In each situation below, indicate the corresponding type of risk. In
The risks listed include those used once or more than once, or not used at all. Types of risks:
A. Control risk
B. Detection risk
C. Potential risks Situations:
1. Customers could not detect employee fraud in time because bank deposit accounts were not reconciled monthly.
2. Money is easier to steal.
3. The auditor's accounts receivable confirmation letter failed to detect material misstatements.
4. Fund expenditures are not properly approved.
5. Failure to fully assign responsibilities.
6. Lack of necessary basic tests.
7. Scientific and technical development makes the main products of the enterprise likely to be obsolete.
8. The auditor chooses a sample that is not representative of the population, so he concludes that the item does not contain material misstatement when in fact it does.
Question 3. At Nam Hai Manufacturing Co., Ltd., there are operating procedures described as follows:
1. When ordering, buy raw materials
Three copies of the application are accepted
Please send me
ha ̀ ng . When multiplying
ha ̀ ng , ward staff
They will write down the actual number
Copy the purchase order and send it to the accounting department to credit the accounts payable and
Where I can afford to buy groceries . Materials
Then you will get it
go to the warehouse.
2. Employee time cards will be sent to the computer room to prepare payroll, pay checks and salary expense allocation tables . The salary check will be attached to the payroll to be presented to a person in the company's management board for comparison and comparison
sign approval. After that, you will receive the employee 's salary .
Check it back for someone to check the distribution
Medical equipment for preparation _ _ _
The company 's main branch includes a _ _
live in two schools and two _ _ _
staff. Only if you can
dream one _
at the local bank 's transaction department
direction . The
Branch fees are paid here. These branch withdrawal checks must be signed by the store manager or the company's chief financial officer . The registration book is mailed to the parents . This person will compare the ledger with the secondary ledger . Residential registration a _ _
The leader will set up one
statement of income and expenses in the branch 's account and _ _ _ _
Request . For each of the above situations, indicate the weaknesses of the internal control system and the types of fraud or errors that may occur.
Question 4. An Binh Company has invested in renovating the Sacred Forest relic area. Due to the policy of encouraging investment in the local tourism industry, An Binh company is exempt from all taxes and is therefore not required to use entrance tickets issued by tax authorities.
During the opening hours of the monument, 2 staff will be at the door to directly collect the entrance fee of 5,000 VND/person. According to company regulations, tour guides with practice cards from the Department of Tourism are exempt from entrance fees.
At the end of the day, one of the two collection staff will bring the money to Mr. Nga, the relic manager. Mr. Nga checked the money and put it in the safe. Every Friday, Mr. Nga and an employee bring money to pay into the bank and send a payment statement to the company.
After 1 year of operation, the director of An Binh company realized that the relic did not bring the expected economic efficiency because the income was lower than the costs. One of the issues raised by the director is to improve internal control over cash collection.
Requirement: Please make a list of possible frauds and discrepancies that can occur .
At the same time , I raised some ideas to prevent it
Question 5.The following situation:
measurement behavior . _ _ _ _
The collapse of the energy corporation Enron led to the collapse of Arthur Andersen
1. Before falling into a state of crisis and collapse
Founded in 1985, on the basis of the merger of two companies Houston Natural Gas and Internorth of Omaha, the name Enteron (gut) comes from the idea that it is an indispensable part in the digestive process, Enron quickly becoming a powerful multinational company in the energy sector after a short period of 15 years. Enron started from nothing to become America's seventh largest company and at one point the world's leading energy company. The company has operations in more than 30 countries
countries around the world, including Vietnam. They employ more than 21,000 employees and are present in more than 40 countries worldwide, including 7,500 employees working in a 50-story building in downtown Houston. A company specializing in natural gas in Omaha, Nebraska (USA) and operating 59,200 km of pipelines.
In 1989, Enron began trading in natural gas products. Over the years, the company became the largest pipeline and power trader in North America and the United Kingdom.
In 1997, the company began to expand its scope of operations by trading in coal, paper and pulp, plastic, metal and telecommunications products. Enron is often seen as the center of revolutions involving telecommunications, the Internet, energy deregulation, etc.
There's not much more to say about the success and scandalous failure of Texas energy tycoon Enron. As well as producing energy, they also create a strong brand identity. Enron won Fortune magazine's "America's Most Innovative Company" award after six years of operation, and they also ranked highly on the same magazine's "Best Companies to Work For" chart. The company also promotes the image of a good public citizen, publishing social and environmental reports that target the company's activities with due regard for the environmental consequences of its work, anti-bribery and corruption policy and working relationships.
Thanks to new regulations liberalizing the US energy market in the 1990s, they transformed from an obscure company into a corporation that could change the balance in the energy business. The 1992 Energy Policy Act forced small utilities to open up transmission lines to Enron's distribution system. In addition, Enron made a lot of money from buying and selling in the energy market. In reality, they are just traders who arrange contracts between buyers and sellers and take commissions. In Enron's hands, the energy market amounted to financial speculation. This company has built factories worth millions of dollars around the world but only owns them when energy prices rise, and when they encounter difficulties, they sell them immediately. Thanks to favorable financial operations, Enron expanded into commodities such as paper, water, plastic, metals and telecommunications.
Enron created more than 900 subsidiaries, mostly located in countries with the most lenient accounting laws. The parent company-subsidiary system was designed by very talented financial experts, and guaranteed by one of the world's five auditing giants: Arthur Andersen.
Over the years, Enron proved itself to be a strong and profitable company
Enron's most significant success was between 1997 and 2000. During this period, Enron's stock price increased from under $20 to over $80. In 2000, Enron's market value reached 77 billion USD. The company's profits also increased very quickly, from 20 billion USD in 1997 to 101 billion USD in 2000, increasing more than five times in just four years, making it one of 7 US companies with sales of more than 100 billion USD. . Mass media systems, typically Fortune magazine, always highlight Enron as the company with the most potential with a business capital of 63 billion USD.
From 1985 to the end of 2001, the company's stock price continuously increased. At its peak in October 2001, the company's stock price more than doubled in just one year.
On the way to develop and expand its field of operations, Enron's business brought more and more risks. In the pipeline transportation business, both quantity and price are stable. But in the field of gas and petroleum trading, prices fluctuate greatly and quantities also fluctuate due to competitive pressure.
Enron was so big that no one believed it could collapse. So why did Enron, America's largest energy company, ranked seventh among America's largest companies, fall into crisis and bankruptcy so quickly?
2. Crisis and collapse
On January 10, the White House officially announced that the leader of Enron, Mr. Kenneth Lay, had contacted senior officials of the Bush administration, including Treasury Secretary Paul Oneil and Secretary of Commerce. Don Evans sought help, asking the government for financial intervention to escape the brink of bankruptcy, but was refused by two Ministers. At that time, Mr. O'neil did not inform Prime Minister Bush about the Enron crisis and the government did nothing to protect Enron's employees and shareholders.
By October 2001, the US Securities and Exchange Commission investigated Enron's accounting books and the truth began to reveal itself.
Arthur Andersen Corporation, responsible for auditing and recording details of Enron's financial activities, has admitted that it destroyed "a significant but undetermined number" of documents about financial irregularities. at Enron. Prosecutors said the number of related documents destroyed could reach thousands.
Many financial analysts continuously rated this company highly, right up until the moment it collapsed. According to the financial magazine Bloomberg Markets, by mid-October 2001, at least 6 famous Wall Street analysts continued to recommend buying Enron shares.
On October 26, 2001, the company admitted for the first time that it had lost hundreds of millions of dollars in a quarter:
Enron announced a loss of 618 million USD in the third quarter but actually amounted to 1.2 billion USD. The hidden debt of 1.2 billion USD caused panic in the stock market when it was revealed.
In August 2001, CEO Jeffrey Skilling resigned for personal reasons.
In December 2001, the Securities and Exchange Commission announced that it had sued Mr. Fastow in a Washington court for failing to turn over documents related to Enron's fraudulent financial activities and failing to appear before the commission. issued a subpoena dated October 30. Chief Financial Officer Fastow had to leave.
When the company is in trouble, they convince employees to receive salaries and bonuses in shares. Paying in shares not only cannot make executives put shareholder interests first, but also has the opposite effect - buying the silence of these directors about the financial situation. By doing so, Enron's value was seriously reduced.
There have been previous predictions
*) In January 2001, an Andersen auditor strongly objected to Enron's accounting methods. A few weeks later, Andersen transferred this employee to another department at Enron's request. An employee of Merrill Lynch (a stock rating company) rated Enron's stock as "unpromising". This employee was fired immediately afterwards.
*) Enron's stock price dropped dramatically: On August 15, 2001, Enron's stock price began to lose value. In early November 2001, Enron's stock price fell below 10 USD. By the end of 2001, each share Only priced at 0.6 USD.
On September 9, 2002, the United States officially transferred Enron's records to the criminal investigation department. This investigation is expected to be directed by Washington but will involve Attorneys from many states. Previously, Enron had undergone a series of civil investigations when it filed for bankruptcy for the second time in December 2001.
At this time, prosecutors are interested in a potentially shocking factor: Attorney General John Ashcroft on January 10 withdrew himself from the Department of Justice's criminal investigation into Enron. , after information about the $61,000 that Enron contributed to his Senate campaign fund in 2000 was announced. The entire Houston Attorney General's office, the agency assigned to investigate the Enron case, also withdrew from the investigation process on the grounds of "financial ties" to Enron.
On December 2001, the company declared bankruptcy.
3. Analyze causes
It was Enron's financial mystery that was the root of the company's downfall. Experts say that this company's mistake is relying too much on financial transactions. According to economic experts, a healthy company must disclose its finances to its partners and vice versa. However, many of Enron's partners did not follow accounting principles, leaving them powerless to control their financial situation.
Due to accounting fees: Andersen signed a contract as a consultant for Enron, then acted as an auditor himself to confirm Enron's financial statements. Consulting and auditing fees are both huge numbers. For example, in 2000, Enron Corp paid Arthur Andersen audit fees of $25 million, consulting fees and other service fees of up to $27 million, for a total of $52 million. That means Enron Corp. paid Arthur Andersen about $1 million a week.
Enron leaders took advantage of legal loopholes to establish subsidiaries without declaring their finances to hide that the company had borrowed beyond its ability to repay. In this way, Enron both did not have to disclose its debts and hid its losses. As a result, Enron inflated its profits and the company's stock price also skyrocketed. When Enron had to officially announce that since 1997 the company had lost over 500 million USD, "insiders" promptly reaped huge profits from the company's shares. Specifically, Chairman and General Director Kenneth Lay held 138 million shares of the company. In early 2001, Kenneth Lay sold it for 79 USD per share. Most of these purchases are not announced.
Enron's financial operations were based on the design and operation of what many analysts termed "ghost cartels." A tangled network of relationships between Enron, some government officials and especially Arthur Andersen Auditing Company helped Enron. Enron's chief accountant, Richard Causey - the man who designed the system to deceive shareholders - was a former auditor at Andersen.
The consecutive dismissal of the company's senior leaders, a number of employees and the spending of hundreds of millions of dollars for officials and employees to buy stocks or securities at special prices is an equally important reason. important.
4. Legal liability
When Enron collapsed, it destroyed more than $60 billion in market value. Thousands of people lost their jobs and "wiped out" billions of dollars in employee retirement accounts.
The company's profit claims were proven to be bogus, and they had huge debts that were not shown in the company's books.
Even more surprising is the story of top leaders, including Enron's former Chief Financial Officer Andrew Fastow, who "trimmed" over 33 million USD from transactions and was convicted after being investigated. 10 years in prison in 2004.
The company collapsed with $13 billion in debt and billions of dollars in debt, credit repayments and energy contract payments. Enron had to declare bankruptcy, marking the largest business failure in the United States. The US Department of Justice decided to investigate whether Enron officials committed fraud before the company went bankrupt.
Turning over the records, it was found that President Georges W. Bush received more than 550,000 dollars from Enron and people related to the company - the largest amount of financial support. In return, he gave Enron significant business incentives. Enron and Ken Lay - Enron's CEO, whom Mr. Bush affectionately nicknamed "Kenny Boy" - donated money to Mr. Bush from his two runs for governor of Texas in 1994 and 1998 (with a total of amount of 312,500 dollrs), to the presidential campaign and also money for the presidential coronation ceremony in early 2001. Lay said that he supported Mr. Bush because of his long relationship with the Bush family. Lay's support even dates back to Bush senior's presidential campaign at least in 1980.
A series of officials from Enron and Andersen have either gone to prison or are awaiting prison sentences. The main victims are those who buy stocks. "Inside" people quickly sold shares before the disaster was discovered. As for most "outside" shareholders, the flight looked like a disaster. There are people who bought shares for $90 only to receive $0.60 in less than a year.
Enron's bankruptcy and political involvement were also exposed. Including this company's close relationships with the White House. Enron donated millions of dollars to George Bush's 2000 election campaign. Although Mr. Bush was personally a friend of Enron CEO Kenneth Lay, he quickly distanced himself from any potentially scandalous involvement with the company.
Enron Corporation also provided financial support to more than 250 members of Congress from both the Democratic and Republican parties between 1989 and 2001. At the top of Enron's list of money recipients are the Senators representing the state of Texas: Kay Baley Hutchinson 99,500 dollars, Republican. Texas Attorney General John Cornyn also received more than 150,000 dollars from Enron and other people in this corporation. In addition, at least 15 senior officials in the Bush administration until 2000 still had shares in Enron corporation, including Secretary of Defense Donald Rumsfeld, senior advisor to the President Karl Rove, Deputy Secretary of the Treasury Peter Fisher and US Trade Representative Robert Zoellick (50,000