14–3. Assume that a highly placed employee has stolen company assets and is now

Question

14–3. Assume that a highly placed employee has stolen company assets and is now planning to conceal the fraud by failing to make an accounting entry for a large transaction. Would the omission probably be for a transaction creating an asset or a liability? Explain.

14–5. Compare the auditors’ approach to the verification of liabilities with their approach to the verification of assets.

14–9. List the major responsibilities of an accounts payable department.

14–11. Which do you consider the more significant step in establishing strong internal control over accounts payable transactions: the approval of an invoice for payment, or the issuance of a check in payment of an invoice? Explain.

14–27. Auditors usually send confirmations to obtain evidence about accounts receivable and accounts payable. a. Is confirmation presumptively required for accounts receivable, accounts payable, or both?

14–28. In the course of your initial audit of the financial statements of Sylvan Company, you determine that of the substantial amount of accounts payable outstanding at the close of the period, approximately 75 percent is owed to six creditors. You have requested that you be permitted to confirm the balances due to these six creditors by communicating with the creditors, but the president of the company is unwilling to approve your request on the grounds that correspondence in regard to the balances—all of which contain some overdue items—might give rise to demands on the part of the creditors for immediate payment of the overdue items and thereby embarrass Sylvan Company. Given these circumstances, what alternative procedure would you adopt in an effort to satisfy yourself that the accounting records show the correct amounts payable to these creditors?

Explanation / Answer

14-3)Here the asset is stolen and for this to be known to management they have to do a physical count of assets if not it can not be traced at all. This is for a transaction creating asset only

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