Testing Assertions

Your client $is$ Adam$s$ Company, $an$ electronic wholesaler. Select the most appropriate audit procedure

$to$ test the assertion. $(An$ audit procedure may $be$ selected once, more than once, $or$ not $at$ all.$)$

Hints:$On$ the Assertion column, you will write down the corresponding assertions I discussed $in$ the recorded

lecturer.

$E.g.,Completeness.On$ the Audit Procedure column, you will select the most appropriate

audit procedure $to$ test the assertion. $E.g.,to$ test $Completeness,$ auditors worry about

understatement, $so$ they will $select$ a sample $of$ shipping documents, match them with related sales

invoices...$,$ and then you will put $in3in$ the corresponding audit procedure box.

Audit Procedure:

Review $of$ bank confirmations and loan agreements.

$2.$ review $of$ drafts $of$ the financial statements.

$3.$ Select a sample $of$ shipping documents, match them with related sales invoices, and determine

that they have been included $in$ the sales journal and accounts receivable subsidiary ledger.

$4.$ Select a sample $of$ shipping documents for a few days before and after year$-$end.

$5.$ Confirmation $of$ accounts receivable.

$6.$ review $of$ aging $of$ accounts receivable with the credit manager.