Weekly Assessment (15%)
Semester : Summer-II Year : 2019/2020
Course Title : Auditing
Course Code : ACT480 Section : O1
Instructor : Dr. Gökberk Can
Instructions Submit your answers only as typed to the given Turnitin link on the
Due Date August 31, 2020 – 23:59
To be completed by the student
Students Name : Student ID:
Question Earned Points Max. Points Question Earned Points Max. Points
Total Earned Points Total Available Points Instructor Signature
ACT480: Auditing Weekly Assessment 1 Summer-2 2020
Question 1 (24 Points)
Stylus Company has an existing loan in the amount of $10 million with an annual interest rate of
8.0%. The company provides an internal company-prepared financial statement to the bank under
the loan agreement. Two competing banks have offered to replace Stylus Co’s existing loan
agreement with a new one. Development Bank has offered to loan Stylus Co $10 million at a rate
of 7.0% but requires Stylus to provide financial statements that have been reviewed by a CPA
firm. Industrial Bank has offered to loan Stylus $10 million at a rate of 5.5% but requires Stylus to
provide financial statements that have been audited by a CPA firm. Quote of the CPA firm shows
that estimated cost of $50,000 to perform a review and $95,000 to perform an audit.
Required: 200 Words
Explain why the interest rate for the loan that requires a review report is lower than that for the
loan that does not require a review. Explain why the interest rate for the loan that requires an audit
report is lower than the interest rate for the other two loans.
Question 2 (30 Points)
According to given to the situations, please choose the most like auditor (CPA, GAO, IRS, or
internal) and audit (Operational, Compliance, Financial) types (2.5 points for each correct cell)
The human resources of a large corporation to evaluate whether the
employees are working efficiently and effectively.
Financial statements for use by stockholders when there is an internal audit
Internal controls at a food company to ensure the food imports are in
compliance with Ministry of Health regulations.
Security tests of a corporation to evaluate whether the computer center is
being operated as efficiently as possible.
Annual statements for the use of management of a company not listed in
Operations of the to determine whether the Ministry of Education auditors are
using their time efficiently in conducting audits.
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Question 3 (30 Points)
Provide two examples for each given value of an ethical person.
(2.5 points for each correct example)
Question 4 (16 Points)
Give two examples for the following situations. (2 points for each correct example)
1. Ethical and Legal
2. Ethical and Illegal
3. Unethical and Legal
4. Unethical and Illegal
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