The following procedures are planned for the audit of DNI Inc. DNI reports under IFRS: 1. Select
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Question:
1. Select a sample of sales invoices and trace the invoices to the general ledger to ensure that the sales were recorded.
2. Attend the company's year-end inventory count. Select a sample of inventory items from the inventory listing and vouch them to items in the inventory warehouse (floor), counting them and agreeing them to the inventory listing.
3. Review the accounts receivable subledger listing and inspect for any related party balances. Ensure that all related party accounts receivable are separately disclosed in the notes to the financial statements.
4. Select a sample of items from the inventory listing. Obtain the recent sales invoices and recent purchase invoices for the items selected, and compare the carrying value to the book value and to the net realizable value to determine if items have been recorded at the appropriate value.
5. Discuss with client management balances owing from a customer and the likelihood of payment being received.
6. Obtain the client's capital asset schedule and recalculate the depreciation expense.
Required: For each of the substantive procedures listed above, identify the risk(s) addressed (R) and the relevant account(s) and assertion(s) (A), and explain how the procedure addresses the risk (P).
Related Book For
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg
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