NAME : PHAM QUỐC THÙY TRÂN

ID : 31161021792

CLASS : BBUS 7.1

HOMEWORK

Exercise 1-24

- The Greenbloom Garden needs to do audit to verify their financial statement to

investors and bank holders when they want to borrow money, especially long-term
borrowings.
- As this is a family business with high work load and involvements , sometimes the
members will attempt to manipulate the amount of company resources. Therefore, it is
necessary to have auditors, to evaluate the fairness of agent’s financial report and to
ensure the company is well-managed.

Exercise 2-24

a) Evaluate the policies and procedures of the Food and Drug Administration in terms of
bringing new drugs to market
 operational audit
b) Determine the fair presentation of Ajax Chemical balance sheet ,income statement and
statement of cash flow
 financial statement audits

c) Review the payment procedures of the account payable department for a large
manufactures
 internal control audits, compliance audits , operational audits

d) Examine the financial records of a division of a corp to determine if any acc irregularities
have occurs
 forensic audits

e) Evaluate the feasibility of forecasted rental income for a planned low-income public
housing project
 operational audits

f) Evaluate a company computer services departments in term of efficient and effective

use of corp resources
  operational audits

g) Audit the partnership tax return of a real estate development company

 compliance audits
h) Investigate the possibility of payroll fraud in a labor union pension fund
 compliance audits

Exercise 19-28

a) No violation
Not impaired : Julia has given only advisory service and not performed any management
decision and the client is a privately held entity
b) Independence violation
Not impaired : Because even when Steve helps in process when implementing a new IT
control system and arrange interview, the final hiring decisions are made by the
company
( HR Services / Internal audit financial information system -> will impair for public
companies )
c) Independence violation
Impaired : Kroener violated the Independence because of self interest
(Blind trust : one type of investment / cannot avoid the direct financial interest for
public company of the audit firm on the client)
d) Independence violation
Impaired : auditor’s close relative/parents have material interest in the audited entity
and have knowledge of financial interest
e) Independence violation
Impaired :
- Not really violated in principle .However we would believe to receive the share at the
end of this year engagement -> you would not be independent
- Saad had sold off his shares before proceeding to plan the fieldwork for the auditor of
next year => no impairment . However , objectivity issues should be taken into account
f) Independence violation
Impaired : the note is a prohibited loan from the member to the client