Auditors frequently refer to the terms principles and procedures. Required: Auditors use different types of audit...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Auditors frequently refer to the terms principles and procedures. Required: Auditors use different types of audit procedures to gather the evidence necessary to conclude that the risk of material misstatement for each relevant assertion has been reduced to an acceptably low level. Identify the type of procedure used by auditors for each of the following examples. Find brokers' invoices and canceled checks showing agreement (1) with record amounts for securities investments. (2) Observe test counting of client's physical inventory taking. Select a sample of shipping documents and trace them to sales invoices, sales journal recording, and posting to general ledger. (4) Ask client personnel about accounting events. (5) Study financial information in relation to nonfinancial information. (6) Scan expense accounts for credit entries. (7) Compare financial information with that of prior periods. (8) Obtain written client representation letter. (9) Scan payroll check lists for unusually large checks. |(10) Complete an internal control questionnaire. (11) Obtain client's lawyer's letter. (3) Study predictable financial information patterns (e.g., ratio (12) analysis). (13) Analyze valuation of receivables by re-aging them by due date. (14) Obtain accounts receivable confirmations. (15) Compare financial information with budgets and forecasts. (16) Verify existence of fixed assets by locating them. (17) Compare financial information to industry statistics. (18) Recompute the client's calculation of depreciation expense. Auditors frequently refer to the terms principles and procedures. Required: Auditors use different types of audit procedures to gather the evidence necessary to conclude that the risk of material misstatement for each relevant assertion has been reduced to an acceptably low level. Identify the type of procedure used by auditors for each of the following examples. Find brokers' invoices and canceled checks showing agreement (1) with record amounts for securities investments. (2) Observe test counting of client's physical inventory taking. Select a sample of shipping documents and trace them to sales invoices, sales journal recording, and posting to general ledger. (4) Ask client personnel about accounting events. (5) Study financial information in relation to nonfinancial information. (6) Scan expense accounts for credit entries. (7) Compare financial information with that of prior periods. (8) Obtain written client representation letter. (9) Scan payroll check lists for unusually large checks. |(10) Complete an internal control questionnaire. (11) Obtain client's lawyer's letter. (3) Study predictable financial information patterns (e.g., ratio (12) analysis). (13) Analyze valuation of receivables by re-aging them by due date. (14) Obtain accounts receivable confirmations. (15) Compare financial information with budgets and forecasts. (16) Verify existence of fixed assets by locating them. (17) Compare financial information to industry statistics. (18) Recompute the client's calculation of depreciation expense.
Expert Answer:
Answer rating: 100% (QA)
1 DOCUMENT INSPECTION VOUCHING 2OBSERVATION 3DOCUMENT INSPECTION TRACING 4INQUIRY AND WRITTEN REPRE... View the full answer
Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
Posted Date:
Students also viewed these accounting questions
-
Auditors frequently refer to the terms standards and procedures. Standards deal with measures of the quality of performance. Standards specifically refer to the generally accepted auditing standards...
-
Use the following information for questions 6-7. Accounts receivable.....$ 2,500 Cost of goods sold........ 200,000 Profit............. 50,000 Net sales. Sales....... 450,000 500,000 Total assets....
-
The type of sampling most frequently used by auditors during their study of internal control is referred to as a. Attributes sampling. b. Control sampling. c. Monetary unit sampling. d. Variables...
-
A factory with three departments uses a single production overhead absorption rate expressed as a percentage of direct wages cost. It has been suggested that departmental overhead absorption rates...
-
A $100 investment purchased one year ago is now worth $90. It also generated $10 of income during the year. Determine the investments: a. Income yield. b. Capital gain yield. c. Rate of total return.
-
The assembly consists of two 12-mm-diameter A992 steel rods AB and CD, a 20-mm-diameter 6061-T6 aluminum rod EF, and a rigid bar AEC. If the horizontal displacement of end F of rod EF is 0.024 mm,...
-
Debits and Credits is a public accounting firm specialising in auditing local medium-sized businesses. Fees charged for each audit are determined on the basis of identifiable hours worked on an audit...
-
The following events concern Anita LeTourneau, a Manitoba law school graduate, for March 2021: 1. On March 4, she spent $20 on a lottery ticket. 2. On March 7, she won $250,000 in the lottery and...
-
Discuss, contrast and compare, the issues surrounding animal consciousness and machine consciousness. How are these issues alike and how different? Do they inform us differently about our...
-
John and Nina Hartwick, married 17 years, have a 13-year-old daughter. Eight years ago, they purchased a home on which they owe about $240,000. They also owe $6,000 on a two-year-old automobile. All...
-
Given a group of students: G = {Allen, Brenda, Chad, Dorothy, Eric), count the number of different ways of choosing 3 representatives, if 2 are male and 1 is female. Assume no one can hold more than...
-
What is meant by internal consistency when applied to forecasting assumptions? Give an example of internal inconsistency.
-
On September 1, Global Tech Inc. purchased merchandise for resale for $20,800 on credit terms 2/15, n/60 using the gross method and a perpetual inventory system. Global Tech incurred a shipping...
-
Identify the reasons that a health care organization needs cash on hand.
-
In what ways might the issue addressed in the research paper affect you as you start your career? What are the potential consequences of reliance on specialists to assist the auditor in making high...
-
Explain the functionality of the C++ code. Use the C++ to Assembly Activity Template to complete thisstep. The C++ file is located within the Software Reverse EngineeringPlayground in the Module One...
-
22. Using static scoping in nesting, what would be the value of x in sub2 if you called big()?(6 pts) function big (function sub10) { var x=7; var y =5; sub20; function sub2() {var y = x; ) var x =...
-
Why is the national security argument for tariffs questionable?
-
The primary purpose for obtaining an understanding of the entitys environment (including its internal control) in a financial statement audit is a. To determine the nature, timing, and extent of...
-
Which of the following would not overstate current- period net income? a. Capitalizing an expenditure that should be expensed. b. Failing to record a liability as an expense. c. Failing to record a...
-
Madison Perry, CPA, is conducting an audit of Parker Inc. In so doing, Perry is performing a study of Parkers internal control and has identified a number of important controls related to purchases...
-
What is the difference between a firm's gross profit margin, operating profit margin, and net profit margin?
-
Last year, Token Corporation reported \($1,230,000\) in sales with a cost of goods sold of \($520,000,\) and operating expenses of \($440,000.\) The increase in the firms retained earnings was...
-
In 2019, Italia Mining Corporation had sales of \($69\) million, total assets of \($45\) million, and total liabilities of \($23\) million. The interest rate on the debt is 6.5 percent, and its tax...
Study smarter with the SolutionInn App