Based on the provided procedure, determine the most likely audit strategy (combined or substantive) that an auditor
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Based on the provided procedure, determine the most likely audit strategy (combined or substantive) that an auditor has selected for the specific cycle.
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Strategy (combined or substantive) Procedures After gaining an understanding of internal controls in the sales cycle, the auditor decided to select a sample of customers and verify that for each customer a credit review form was completed and the form was signed by the manager. After gaining an understanding of internal controls in the payroll cycle, the auditor decided to select a sample of reconciliations between timesheets and the payroll ledger. The auditor then reviewed the reconciliations to see if they were done accurately and verified whether they were signed by the payroll supervi- sor who is responsible for reviewing them. After gaining an understanding of internal controls in the purchasing cycle, the auditor decided to select a sample of accounts payable balances and directly confirm these balances with the company's suppliers. Strategy (combined or substantive) Procedures After gaining an understanding of internal controls in the purchasing cycle, the auditor decided to select a sample of inventory receiving reports and verify that all exceptions listed in the reports were resolved and that the reports have been signed by the warehouse manager who is responsible for reviewing the reports on a weekly basis. After gaining an understanding of internal controls in the sales cycle, to ensure proper sales cutoff was achieved, the auditor decided to review the dates on all shipping documents one week prior to and one week after the year-end date. After gaining an understanding of internal controls in the purchasing cycle, the auditor decided to select a sample of lease agreements and trace all pertinent information from the agreements to the financial accounting system records.
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Related Book For
Auditing The Art and Science of Assurance Engagements
ISBN: 978-0134613116
14th Canadian edition
Authors: Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Joanne C. Jones
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