10-32 ( NB01 ) Februari 5, 2010

Kertas Kerja Pemeriksaan Kelompok 1 (NB01)

Deboner Hillery Hasiholan (20207263)

Dini Tri Wardani (20207343)

Dini Yartiwulandari (21207266)

Yogi Afrianto (21207194)

Object: Anthony, CPA

Client: Medium-Sized Manufacturing Company

Item	Strength	Weakness	Recommendation
A→B	All requisitions of warehouse daprtment are fulfilled by purchase department
B→C	Submission of document of purchase and the purchase order is attached
C→E		There are inefficiencies in the submission document combines the purchase and the purchase order document.	we recommend to the Anthony CPA to cut the double match pf the document so it would be more efficient.
D→E		On receipt of goods department purchase orders and purchase requisition are not attached together	the purchase order document is not match with the purchase requisition, it give a chance to manipulate the document.
E→F	In the accounting department all the necessary documents are required

Audit Sampling 14-29 ( NA02 ) Februari 3, 2010

a.  SER= Number of exception / sample size

Column	Planned Audit				SER (%)
	ARACR	Population Size	Sample Size	Number of Exeption
1	10	5000	200	4	2
2	5	5000	200	4	2
3	5	5000	50	1	2
4	5	50000	200	4	2
5	5	500	100	2	2
6	5	900	100	10	10
7	5	5000	100	0	0
8	5	500	25	0	0

Colomn	TER(5%) – SER
1	3
2	3
3	3
4	3
5	3
6	0
7	5
8	5

b.

Column	Planned Audit				CUER
	ARACR	Population Size	Sample Size	Number of Exeption
1	10	5000	200	4	4,0
2	5	5000	200	4	4,6
3	5	5000	50	1	9,2
4	5	50000	200	4	4,6
5	5	500	100	2	6,2
6	5	900	100	10	16,4
7	5	5000	100	0	3,0
8	5	500	25	0	11,3

c.   1. Decrease in ARACR                                      = CUER Increase

2. Decrease in Population size                       = CUER Increase

3. Decrease in sample size                               = CUER Increase

4. Decrease in number of exception           = CUER Increase

d. Sample size and Number of exception have the greatest effects on the CUER,

population size has the least effect on the CUER

e. It is necessary to compare the CUER with the TER because the auditor need to analyze

the individual exception to find the weakness of internal control

Audit Sampling = 14-28 ( NA02 )

a) By using judgement

Column	Planned Audit				Initial Sample
	ARACR	TER	EPER	Population Size
1	10	6	2	1000	90
2	5	6	2	100000	120
3	5	5	2	6000	150
4	5	6	2	1000	100
5	10	20	8	500	45
6	10	20	2	500	30
7	5	2	0	1000000	200

b. By using attributes sampling from the appropriate part of table 14-8

Column	Planned Audit				Initial Sample
	ARACR	TER	EPER	Population Size
1	10	6	2	1000	132
2	5	6	2	100000	127
3	5	5	2	6000	181
4	5	6	2	1000	127
5	10	20	8	500	25
6	10	20	2	500	18
7	5	2	0	1000000	149

c.      1. Increase in ARACR                      = Sample Decrease

2. Increase in TER                             = Sample Decrease

3. Increase in EPER                          = Sample Increase

4. Incrase in population size        = Sample Increase

d. because there are differences in ARACR and TER percentage and also there is a huge  differences in population size.

e. ARACR and TER have the greatest effect on the initial sample size and population size has the least effect on the

initial sample size.

f. The initial sample size is called that because the exceptions in the actual sample must be evaluated before it possible

to know whether the sample is sufficiently large to achieve the objectives of the tests.

Internet Problem 12 ( NA01 )

1. How does IT governance fit into an organization’s overall governance?

Answer :

IT governance can be defined as a set of processes to effectively manage all IT   assets, functions, and processes which support business goals and the fusion of business and IT. An enforceable program of IT governance is the key to gaining more value from open source and protecting the interests of your organization.

It is important to understand the context in which FOSS governance fits into your organization’s overall IT governance system. Understanding and targeting open source issues within your organization is the first of many steps in developing and implementing a FOSS governance system. It is crucial to have a full understanding of the impact that using open source has in organization. The following section identifies the areas within an organization’s IT governance structure that are likely to be impacted by the use of FOSS.

Internet Problem 11 ( NA01 )

1. What are three common pitfalls that should be avoided during brainstorming sessions? How can these problems be avoided?

Answer :

Three Common pitfalls can hinder the effectiveness of the audit team   brainstorming: the domination of groups, “social loafing,” “groupthink” and “groupshift.”
–       The dominance of the group is one of the most corrosive problems. Since the purpose   of the brainstorming session is to have the audit team members to share thoughts and ideas, one or two participants dominating the process can quickly extinguish the creative energies of the group as a whole, reduces the likelihood that the team will identify any actual risk of fraud.
–      Social loafing, also called free-ride, other potential pitfalls of brainstorming activities. This occurs when the participants away from the process, hoping that the other team members will take the slack. Another reason such “lazy” may contain “why bother” feeling that comes from the dominance of the group, the absence of attractive incentives to actively participate in discussions and the failure of an individual is enough to make a personal investment in the task group.
–           Groupthink another trap to avoid. This phenomenon occurs when team members became so concerned with reaching an agreement that they fail to realistically evaluate all ideas or suggestions. Audit team can be very vulnerable to this as the auditor general is very sensitive to time / budget pressures. As such, they can be aligned with the view of fraud risk groups in an attempt to complete the task efficiently. Groupshift is the fourth trap. While the purpose of brainstorming sessions was to assist the audit team collectively came to the conclusion about the risk of fraud, the team leader must be careful to avoid allowing the team to take extreme positions on the risk of fraud.

Brainstorming team leader can avoid the pitfalls described above by following these guidelines:
– Assign homework. Discussion leader must notify participants well before the scheduled meeting that they would discuss the risk of fraud so that each team member can focus on ideas about how and where the entity vulnerable.
– Distribute the agenda of the meeting (see example) also would provide greater context for participants to think about the possible risks of fraud and will further inform them of what will happen during the brainstorming session.
– Leaders should encourage team members to use the experience and knowledge gained during previous audits and the recent interaction with the client. In addition, he must emphasize that the task should not be too long; members can formulate ideas when they run day-to-day tasks.
– The leaders should ask people to come to a meeting with a list of their ideas

Internet Problem 10 ( NA01 )

1. Use EDGAR to search for Tri-Valley Corporation (TVC) and Monarch Staffing Inc. Find TVC’s 10-K and Monarch’s 10-KSB for the year ended 12-31-06.

Answer :

Tri – Valley Corporation (TVC), 10-K Report, Year ended 12/31/2006.

http://www.sec.gov/Archives/edgar/data/22551/000002255107000009/tvc123106-10k.htm

Monarch Staffing Inc. 10-KBS Report, Year ended 12/31/2006.

http://www.sec.gov/Archives/edgar/data/1177326/000114037707000054/0001140377-07-000054-index.htm

Internet Problem 9 ( NA01 )

Internet Problem 9-1 (Materiality and Tolerable Misstatement)

1. Imagine that you are employed as an auditor in a CPA firm that performs the audit of Microsoft. Your firm’s materiality guidelines indicate that overall engagement materiality should be set at an amount between five and ten percent of income before taxes.

a.  Apply your firm’s guidelines to Microsoft’s 2003 financial statements. What percentage of income before taxes do you believe is appropriate? Why? What do you believe overall engagement materiality should have been for 2003?

Answer :

1. Step in determining materiality in the implementation of the company:

– Determine the initial consideration of the materiality
– Allocate initial consideration of materiality to the segment
– Estimated total errors in the segment
– Estimate the combined error
– Compare the estimate with the combined initial consideration of the materiality

Selected materiality level of 5% -10%, because every company is different in determining the level of misstatement. An auditor should consider from the beginning. If the misstatement rate is less than the materiality level is considered reasonable profit company.

Internet Problem 8 ( NA01 )

Internet Problem 8-1 (Industry Research and Client Acceptance)

The vignette at the beginning of Chapter 6 in the text contains a brief description of the ZZZZ Best fraud. One area where the auditors were particularly criticized in that audit had to do with the auditors’ lack of industry knowledge. With hindsight it appeared that the fraud should have been easily detected because ZZZZ Bests’ large restoration contracts were in excess of $7 million while the largest restoration jobs on record in the insurance restoration industry were less than $3 million.

You have been approached by On the Sunny Side, a team sports uniform designer and manufacturer for women, about performing the company’s financial statement audit. The company began operations eight years ago and has experienced strong growth in the last several years. Teri Kloth, the chief executive officer, has told you that her company expects production in 2004 to be 450,000 units. She also provided summary historical financial and operating data regarding unit sales. In   2002 and 2003, the company reported sales of 365,000 and 402,000 units, respectively.
Are On the Sunny Side’s 2002 and 2003 unit sales reasonable? Why or why not? (Hint: Visit the U.S. Census Bureau’s web site. Once you are at the site, go to the “Business” section and then to the “Manufacturing” sector-specific data section. Once you are there, locate the Current Industrial Reports. Next search the CIRs by Subject Title for Apparel. Data about women’s team sports uniforms can be found by search for “Apparel.” Use the most current annual report for your analysis.

Answer :

My analysis about the sunny side’s 2002 and 2003 unit sales is reasonable because according the result from most current annual report show significant increase in every year.

Internet Problem 7 ( NA01 )

1. Read about ACL’s solution for data quality and fraud detection. How might an auditor use ACL’s data analytics software for these two purposes?

Answer :

For fraud detection:

With ACL, you have a powerful fraud solution to create and run comprehensive tests designed to detect indicators of a wide range of fraud, for limitless volumes  of transactions and from virtually any data source.

ACL technology helps detect and prevent fraud by allowing organizations to:

• Test 100 percent of transactions
• Quickly access data from any source
• Flag all suspicious activity
• Automate testing to free up resources for more strategic investigations
• Summarize fraud risks for management review

Internet Problem 6 ( NA01 )

1. Read the statements issued by the PCAOB and SEC on May 16, 2005 and briefly describe the apparent underlying cause(s) for auditors’ failure in applying the concept of reasonable assurance. Hint: Read the portion of the PCAOB’s policy statement entitled “The Importance of Professional Judgment.”

Answer :

Because those auditors have instead used a one-size-fits-all audit plan

driven by standardized checklists that may have little to do with the unique issues

and risks of the particular client’s financial reporting processes. This is a

disappointing development indicative of poor training and audit planning.