A CPA Is Engaged in the Audit of Financial Statements

question 11

Essay

A CPA is engaged in the audit of financial statements of a large manufacturer with branch offices that are widely dispersed.This CPA is not able to count the substantial undeposited cash receipts at the close of business on the last day of the fiscal year at all branches.As an alternative to this procedure to verify the accurate cutoff of cash receipts,the CPA observes that deposits in transit as shown on the year-end bank reconciliation appeared as credits on the bank statement on the first business day of the New Year.Based on this,the auditor was satisfied as to the cutoff of cash receipts. REQUIRED: Which type of audit report would you suggest be issued this year and why?

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Definitions:

Psychoanalysis

A therapeutic approach that aims at exploring unconscious thoughts and feelings, originally developed by Sigmund Freud.

Behaviorism

A psychological theory that focuses on observable behaviors and disregarding internal processes, emphasizing the learning process through rewards and punishments.

Cognitive Psychology

A branch of psychology that studies mental processes including how people think, perceive, remember, and learn.

Natural Drive

Intrinsic motivations or biological imperatives that guide behavior, such as hunger, thirst, or the drive for survival.