(3) Review Note 5 required you to test the operating effectiveness of an internal control (ensuring appropriate...
Question:
(3) Review Note 5 required you to test the operating effectiveness of an internal control (ensuring appropriate approval of
write-offs). To which financial statement assertion does this internal control relate most closely? Based on the evidence
you gathered, and considering the Audit Risk Model, would you recommend that your audit team revise the audit
plan? If so, which risks in the Audit Risk Model would change and how (increase/decrease)? How might you respond
to the changes in these risk(s)?
Review Note 5 of 6:
I haphazardly selected an additional 10 items from the 20X3 write-off schedule to complete the control testing (see Review Note 4 of 6). Please request the write-off memos from the client and complete the procedures denoted in tickmark h.
(4) Review Note 6 related to an exception found during cutoff testing and the required additional procedures to be
performed. Based on this exception and the additional procedures you performed, discuss the implications. Consider
the following in your discussion:
a. which financial statement assertion this audit work most closely relates to,
b. the total dollar amount of the exception(s) based on the testing performed,
c. the effect of the exception(s) on the accounts receivable balance (understatement or overstatement) in the current
year (12/31/20X3) and next year (i.e., 12/31/20X4) if not adjusted, and
d. the appropriate auditor response to the exception(s).
Review Note 6 of 6:
We still need to perform additional cutoff procedures due to this exception. Please perform the procedures suggested in the firm guidance on misstatements found during tests of details.
(5) Using PCAOB AS 1215, paragraphs 8 and 12, describe the auditor's responsibilities for documenting information
related to significant findings or issues inconsistent with the auditor's conclusions and three factors that would indicate
a finding or issue is significant. Would you deem any of the issues/exceptions that you noted during your audit work to
be significant?
Auditing and Assurance services an integrated approach
ISBN: 978-0132575959
14th Edition
Authors: Alvin a. arens, Randal j. elder, Mark s. Beasley