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Solutions Manual for Auditing and Accounting Cases 4th Edition by Jay Thibodeau & Deborah Freier $36.00
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Solutions Manual for Auditing and Accounting Cases 4th Edition by Jay Thibodeau & Deborah Freier

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Solutions Manual for Auditing and Accounting Cases 4th Edition by Jay Thibodeau & Deborah Freier

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  • December 30, 2024
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SOLUTION M

,SECTION ONE: FRAUD CASES: VIOLATIONS OF ACCOUNTING PRINCIPLES
Case 1.1 : Waste Management: The Expense Recognition Principle
Case 1.2 : WorldCom: The Revenue Recognition Principle
Case 1.3 : Qwest: The Full Disclosure Principle
Case 1.4 : Sunbeam: The Revenue Recognition Principle
Case 1.5 : Waste Management: The Definition of an Asset
Case 1.6 : Enron: The Revenue Recognition Principle
Case 1.7 : WorldCom: The Expense Recognition Principle
Case 1.8 : Bernard L. Madoff Investment and Securities:Broker-Dealer Fraud
Case 1.9 : Qwest: The Revenue Recognition Principle
Case 1.10 : The Baptist Foundation of Arizona: The Conservatism Constraint
Case 1.11 : WorldCom: The Definition of an Asset
Case 1.12 : Bernard L. Madoff Investment and Securities: The Role of the Securities &
Exchange Commission


SECTION TWO : ETHICS AND PROFESSIONAL RESPONSIBILITY CASES
Case 2.1 : Enron: Independence
Case 2.2 : Waste Management: Due Care
Case 2.3 : WorldCom: Professional Responsibility
Case 2.4 : Enron: Quality Assurance
Case 2.5 : Sunbeam: Due Care
Case 2.6 : Bernard L. Madoff Investment and Securities: A Focus on Auditors’ and
Accountants’ Legal Liability
Case 2.7 : Enron: Audit Documentation


SECTION THREE FRAUD AND INHERENT RISK ASSESSMENT CASES
Case 3.1 : Enron: Understanding the Client’s Business and Industry
Case 3.2 : The Baptist Foundation of Arizona: Related Party Transactions
Case 3.3 : WorldCom: Significant Business Acquisitions
Case 3.4 : Sunbeam: Incentives and Pressure to Commit Fraud
Case 3.5 : Qwest: Understanding the Client’s Business and Industry

,Case 3.6 : Bernard L. Madoff Investment and Securities: Understanding the Client’s Business
and Industry
Case 3.7 : Waste Management: Understanding the Client’s Business and Industry


SECTION FOUR INTERNAL CONTROL SYSTEMS: ENTITY-LEVEL CONTROL CASES
Case 4.1 : Enron: The Control Environment
Case 4.2 : Waste Management: General Computing Controls
Case 4.3 : The Baptist Foundation of Arizona: The Whistleblower Hotline
Case 4.4 : WorldCom: The Internal Audit Function
Case 4.5 : Waste Management: Top-Side Adjusting Journal Entries


SECTION FIVE INTERNAL CONTROL SYSTEMS: CONTROL ACTIVITY CASES
Case 5.1 : The Fund of Funds: Valuation of Investments
Case 5.2 : Enron: Presentation and Disclosure of Special Purpose Entities
Case 5.3 : Sunbeam: Completeness of the Restructuring Reserve
Case 5.4 : Qwest: Occurrence of Revenue
Case 5.5 : The Baptist Foundation of Arizona: Presentation and Disclosure of Related Parties
Case 5.6 : Waste Management: Valuation of Fixed Assets
Case 5.7 : Qwest: Occurrence of Revenue


SECTION SIX COMPREHENSIVE COMPANY CASES
Case 6.1 : Enron
Case 6.2 : Waste Management
Case 6.3 : WorldCom
Case 6.4 : Sunbeam
Case 6.5 : Qwest
Case 6.6 : The Baptist Foundation of Arizona
Case 6.7 : The Fund of Funds

, Case 1.1 - Waste Management: The Expense Recognition Principle



Case #1.1 – Waste Management: The Expense Recognition Principle
I. Technical Guidance

To maximize a student’s knowledge acquisition of this material, this book has been designed to
be read in conjunction with the post–Sarbanes-Oxley technical audit guidance. All of the
PCAOB Auditing Standards that are referenced in this book are available for free at
http://pcaobus.org/STANDARDS/Pages/default.aspx. In addition, a summary of the provisions
of the Sarbanes-Oxley Act of 2002 is available for free on the book’s website at
www.mhhe.com/thibodeau4e or at http://www.aicpa.org/Pages/Default.aspx.

II. Recommended Technical Knowledge

Conceptual Framework

The Expense Recognition Principle (sometimes referred to as the Matching Principle)

PCAOB Auditing Standard No. 5

Paragraph #2

PCAOB Auditing Standard No. 15

Paragraphs #5-6

III. Classroom Hints

This case provides students with an opportunity to appreciate the difficulty that can be

associated with auditing the application of depreciation rules to different types of assets at an

audit client. Since the computation of depreciation expense requires management to estimate the

salvage value and the estimated useful life for each asset depreciated, an auditor is often forced

to evaluate a number of subjective factors when completing his/her procedures. To properly do

so, students are able to see that an auditor must first understand the true economic substance of

management's estimates for both salvage value and the estimated useful life. After gaining this

understanding, the auditor must then determine whether the client has properly calculated and

recorded depreciation expense in accordance with the economically appropriate estimates. Of

course, each of these judgments must be made based on sufficient and competent evidence. In
1
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Education.

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