An important part of every audit is examining vendors invoices processed after year end. Related to cutoff,
Question:
An important part of every audit is examining vendors’ invoices processed after year end. Related to cutoff, as discussed in Module VI, this set of procedures has the purpose of determining that no significant invoices pertaining to the year being audited have been omitted from recorded liabilities. Derick has asked that you examine the document prepared by Cheryl Lucas and entitled “Search for Unrecorded Liabilities,” and review it for necessary audit adjustments.
Requirements:
1. Retrieve the file labeled “20X9 Liab.” (LINK) Comment on the adequacy of the procedures performed by Lucas.
2. Assuming that you found the following additional unrecorded charges pertaining to 20X9, draft Audit
Adjustment 6 at the bottom of WP 15.1:
a. Sales commissions $366,900
b. Employer’s payroll taxes: FICA $94,000, state unemployment $126,000
c. Printing and copying $27,800
d. Postage $22,300
e. Office supplies $18,6002
3. Print or Save the document.
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach