How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Michael Hannigan Your Own Question

Michael Hannigan
Michael Hannigan, Internet Researcher
Category: General
Satisfied Customers: 8512
Experience:  Extensive experience in research and problem solving.
23511658
Type Your Question Here...
Michael Hannigan is online now
A new question is answered every 9 seconds

Determine if the following items increase risk, decrease risk,

Resolved Question:

Determine if the following items increase risk, decrease risk, or have not effect on audit risk for TWD. TWD is private waste company. Company's financial statements are for the year ending 2006.

1.This was the first year TWD operated at a profit since 2000 because the municipalities received increased federal and state funding for environmental purposes.
2. TWD’s board of directors is controlled by Mead, the majority stockholder, who also acts as the chief executive officer.
3. The internal auditor reports to the controller, and the controller reports to Mead.
4. The accounting department has experienced a high rate of turnover of key personnel.
5. TWD’s bank has a loan officer who meets regularly with TWD’s CEO and controller to monitor TWD’s financial performance.
6. TWD’s employees are paid biweekly.
7. Bond has audited TWD for five years.
8. During 2006, TWD changed its method of preparing its financial statements from the cash basis to generally accepted accounting principles.
9. During 2006, TWD sold one-half of its controlling interest in United Equipment Leasing (UEL) Co. TWD retained significant interest in UEL.
10. During 2006, litigation filed against TWD in 1996 alleging that TWD discharged pollutants into state waterways was dropped by the state. Loss contingency disclosures that TWD included in prior years’ financial statements are being removed for the 2006 financial statements.
Submitted: 1 year ago.
Category: General
Expert:  replied 1 year ago.

Here are answers along with the reasoning. Please let me know if you have any other questions.

1. (D) Since TWD returned to profitable operation, its healthier financial condition leads to a decrease in the risk of material misstatement.
2. (I) The risk of material misstatement increases when management is dominated by a single person. Since Mead controls the Board of Directors, is a majority stockholder, and is the CEO, it would appear that Mead dominates management.
3. (I) The risk of material misstatement increases when the internal auditor reports to top management rather than to the audit committee because it is less likely that the internal auditor will be able to objectively perform the function.
4. (I) The risk of material misstatement increases when the key management positions (particularly senior accounting personnel) encounter turnover.
5. (D) The loan officer’s continual monitoring of TWD decreases the risk of material misstatement.
6. (N) Timing of payroll cycles would normally have no impact on the risk of material misstatement.
7. ?? Not sure who Bond is. If the point is that the same person has audited the company for 5 years, this increases risk.
8. (I) A change to generally accepted accounting principles will increase the risk of material misstatement because the change in basis requires management to prepare a number of entries that have not been made in the past; these entries may be made improperly. Also, difficulties in determining beginning accrual basis balances increases the risk of misstatement.
9. (I) The sale of one-half of the company’s controlling interest in United Equipment Leasing is an entry that is out of the ordinary course of business, and accordingly, increases the risk of material misstatement.
10. (D) Litigation results in contentious and difficult accounting valuation issues because an accountant must attempt to determine the likelihood of loss and the amount.

Mike

Michael Hannigan, Internet Researcher
Category: General
Satisfied Customers: 8512
Experience: Extensive experience in research and problem solving.
Michael Hannigan and 105 other General Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
< Last | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin Kernersville, NC
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther Woodstock, NY
  • Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. Robin Elkton, Maryland
  • He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here. Diane Dallas, TX
 
 
 

Meet The Experts:

 
 
 
  • Ron

    ASE Certified Technician

    Satisfied Customers:

    21594
    23 years with Ford specializing in drivability and electrical and AC. Ford certs and ASE Certs
< Last | Next >
  • http://ww2.justanswer.com/uploads/FO/fordguy4u/2011-12-17_222940_HPIM1257.64x64.JPG Ron's Avatar

    Ron

    ASE Certified Technician

    Satisfied Customers:

    21594
    23 years with Ford specializing in drivability and electrical and AC. Ford certs and ASE Certs
  • http://ww2.justanswer.com/uploads/lyeung1/2010-07-25_032152_tn_IMG_0241.JPG Dr. Y.'s Avatar

    Dr. Y.

    Urologist

    Satisfied Customers:

    18601
    I am fellowship trained specializing in general urology and reconstructive urology.
  • http://ww2.justanswer.com/uploads/docjohn174/2008-12-13_170143_johnask.jpg John's Avatar

    John

    Home Appliance Technician

    Satisfied Customers:

    13453
    Appliance repair business owner for over 43 years.
  • http://ww2.justanswer.com/uploads/MU/multistatelaw/2011-11-27_173951_Tinaglamourshotworkglow102011.64x64.jpg Tina's Avatar

    Tina

    Lawyer

    Satisfied Customers:

    8619
    JD, BBA Over 25 years legal and business experience.
  • http://ww2.justanswer.com/uploads/dermdoc19/2010-09-30_160749_Photo_122807_015.JPG dermdoc19's Avatar

    dermdoc19

    Dermatologist

    Satisfied Customers:

    3911
    30 years practice in general and cosmetic dermatology
  • http://ww2.justanswer.com/uploads/BI/birddoctor/2012-6-22_173214_birddoctor.64x64.png Dr. Pat's Avatar

    Dr. Pat

    Bird Veterinarian

    Satisfied Customers:

    3441
    25+ years working primarily or exclusively with birds
  • http://ww2.justanswer.com/uploads/RY/rydergar/2012-6-6_192240_IMG0328.64x64.JPG Dr. Gary's Avatar

    Dr. Gary

    Cat Veterinarian

    Satisfied Customers:

    3369
    DVM, Emergency Veterinarian, BS (Physiology)