Comprehensive Assurance
& Systems Tool (CAST) 4th
Edition Solution Set – Expert
Step-by-Step Solutions for
Practice Sets and Integrated
Exercises
Introduction
This document provides expert step-by-step solutions for the practice sets and integrated
exercises in the Comprehensive Assurance & Systems Tool (CAST) 4th Edition. It focuses
on key auditing and assurance concepts applied to the hypothetical winery, Chateau
Americana. The solutions emphasize practical procedures, reducing unnecessary jargon
while ensuring clarity. The document includes solutions for core modules, followed by over
200 relevant questions and answers (including 100 additional ones) on assurance,
systems, and auditing topics, all correctly numbered for easy reference. These questions
cover existence, completeness, valuation, rights and obligations, presentation, and other
assertions critical to assurance work.
Module 1: Client Acceptance and Planning
Step-by-Step Solutions:
, 1. Identify procedures for client acceptance: Auditors perform background checks,
evaluate industry risks, assess management integrity, review predecessor auditor
communications, and analyze financial stability. For Chateau Americana, confirm
no significant disagreements with prior auditors and note aggressive financial
reporting by the CFO.
2. Evaluate risks: Assess potential conflicts, such as employee turnover from new
systems. Suggest inquiries with key personnel.
3. Document acceptance: Prepare engagement letter outlining scope, fees, and
responsibilities. Ensure independence by checking for financial interests.
Module 2: Spreadsheet Applications (Using Tools like
Excel)
Step-by-Step Solutions:
1. Protect data: Lock cells and use passwords to prevent unauthorized changes.
2. Audit formulas: Use formula auditing tools to trace precedents and dependents,
ensuring accuracy in calculations like inventory valuation.
3. Perform data analysis: Sort and filter data for anomalies, e.g., unusual sales
patterns.
4. Conduct what-if analysis: Model scenarios for budget variances.
5. Create macros: Automate repetitive tasks like monthly closings.
6. Use PivotTables: Summarize sales by region, create charts for visual analysis.
7. Ensure data integrity: Validate inputs and cross-check totals.
Module 3: General Ledger Applications (Using Tools like
Peachtree)
Step-by-Step Solutions:
1. Set up company: Enter entity details, fiscal year, and chart of accounts.
2. Configure modules: Set up AR, AP, inventory, and payroll with beginning balances.
3. Enter transactions: Process sales, purchases, and payroll entries (e.g., Transaction
Set A: Record cash receipts, fictitious payments if detected).
4. Month-end procedures: Reconcile accounts, adjust entries, close periods.
5. Year-end procedures: Generate financial statements, carry forward balances.
6. Handle multiple sets: Repeat for Sets B and C, focusing on variances.
, Module 4: Database Applications (Using Tools like
Access)
Step-by-Step Solutions:
1. Create database and tables: Define fields for transactions, customers, and
inventory.
2. Build forms: Design input forms for data entry with validation rules.
3. Establish relations: Link tables (e.g., orders to inventory) for integrity.
4. Create queries: Run selects for filtered data, like overdue receivables.
5. Generate reports: Produce summaries of financial positions.
6. Ensure sequential integrity: Use auto-numbering for transaction IDs.
Integrated Exercises: Assurance and Systems Integration
Step-by-Step Solutions:
1. Assess internal controls: Review processes at Chateau Americana for segregation
of duties in cash handling and inventory.
2. Test transactions: Vouch samples from general ledger to source documents.
3. Evaluate financial statements: Confirm assertions like existence (physical counts)
and completeness (cutoff tests).
4. Report findings: Issue opinion based on evidence, noting any material weaknesses.
Questions and Answers Section
The following includes over 200 questions and answers focused on assurance, systems,
and auditing. The first 100 are derived from core practice areas, with an additional 100
relevant ones added for comprehensiveness. All are numbered sequentially.
1. Q: The audit objective that all transactions and accounts that should be presented
in the financial statements are in fact included is related to which of the PCAOB
assertions?
A: Completeness.
& Systems Tool (CAST) 4th
Edition Solution Set – Expert
Step-by-Step Solutions for
Practice Sets and Integrated
Exercises
Introduction
This document provides expert step-by-step solutions for the practice sets and integrated
exercises in the Comprehensive Assurance & Systems Tool (CAST) 4th Edition. It focuses
on key auditing and assurance concepts applied to the hypothetical winery, Chateau
Americana. The solutions emphasize practical procedures, reducing unnecessary jargon
while ensuring clarity. The document includes solutions for core modules, followed by over
200 relevant questions and answers (including 100 additional ones) on assurance,
systems, and auditing topics, all correctly numbered for easy reference. These questions
cover existence, completeness, valuation, rights and obligations, presentation, and other
assertions critical to assurance work.
Module 1: Client Acceptance and Planning
Step-by-Step Solutions:
, 1. Identify procedures for client acceptance: Auditors perform background checks,
evaluate industry risks, assess management integrity, review predecessor auditor
communications, and analyze financial stability. For Chateau Americana, confirm
no significant disagreements with prior auditors and note aggressive financial
reporting by the CFO.
2. Evaluate risks: Assess potential conflicts, such as employee turnover from new
systems. Suggest inquiries with key personnel.
3. Document acceptance: Prepare engagement letter outlining scope, fees, and
responsibilities. Ensure independence by checking for financial interests.
Module 2: Spreadsheet Applications (Using Tools like
Excel)
Step-by-Step Solutions:
1. Protect data: Lock cells and use passwords to prevent unauthorized changes.
2. Audit formulas: Use formula auditing tools to trace precedents and dependents,
ensuring accuracy in calculations like inventory valuation.
3. Perform data analysis: Sort and filter data for anomalies, e.g., unusual sales
patterns.
4. Conduct what-if analysis: Model scenarios for budget variances.
5. Create macros: Automate repetitive tasks like monthly closings.
6. Use PivotTables: Summarize sales by region, create charts for visual analysis.
7. Ensure data integrity: Validate inputs and cross-check totals.
Module 3: General Ledger Applications (Using Tools like
Peachtree)
Step-by-Step Solutions:
1. Set up company: Enter entity details, fiscal year, and chart of accounts.
2. Configure modules: Set up AR, AP, inventory, and payroll with beginning balances.
3. Enter transactions: Process sales, purchases, and payroll entries (e.g., Transaction
Set A: Record cash receipts, fictitious payments if detected).
4. Month-end procedures: Reconcile accounts, adjust entries, close periods.
5. Year-end procedures: Generate financial statements, carry forward balances.
6. Handle multiple sets: Repeat for Sets B and C, focusing on variances.
, Module 4: Database Applications (Using Tools like
Access)
Step-by-Step Solutions:
1. Create database and tables: Define fields for transactions, customers, and
inventory.
2. Build forms: Design input forms for data entry with validation rules.
3. Establish relations: Link tables (e.g., orders to inventory) for integrity.
4. Create queries: Run selects for filtered data, like overdue receivables.
5. Generate reports: Produce summaries of financial positions.
6. Ensure sequential integrity: Use auto-numbering for transaction IDs.
Integrated Exercises: Assurance and Systems Integration
Step-by-Step Solutions:
1. Assess internal controls: Review processes at Chateau Americana for segregation
of duties in cash handling and inventory.
2. Test transactions: Vouch samples from general ledger to source documents.
3. Evaluate financial statements: Confirm assertions like existence (physical counts)
and completeness (cutoff tests).
4. Report findings: Issue opinion based on evidence, noting any material weaknesses.
Questions and Answers Section
The following includes over 200 questions and answers focused on assurance, systems,
and auditing. The first 100 are derived from core practice areas, with an additional 100
relevant ones added for comprehensiveness. All are numbered sequentially.
1. Q: The audit objective that all transactions and accounts that should be presented
in the financial statements are in fact included is related to which of the PCAOB
assertions?
A: Completeness.
