Toby is a junior accountant who is assisting you with the audit of Johnson Ltd, a small manufacturer of soft drink. Toby has indicated that he has completed testing on accounts payable and sales and says he has performed the following tests: In relation to accounts payable, Toby selected a random sample of creditors from the accounts payable ledger and agreed these to statements, invoices and reconciliations. 

The balance of the accounts payable ledger was then agreed to the general ledger and the trial balance. Toby found no discrepancies. A positive debtors confirmation was performed on the 30 June balances. George Pty Ltd had an outstanding balance as per the confirmation of $10,000, however in their reply they noted that they only owed $9,000. The difference is due to invoice #1938 dated 1 July 2020. Toby has noted that George’s account appears to be overstated but the amount is immaterial and he has not performed any additional work. 

Toby performed tests of control on Sales. Out of 50 items, he found 4 breaches of control. Toby notes that as the errors were immaterial and the error rate was below 10% no further work is required and controls over Sales can be relied on. 

Required: 

For each procedure 1-3 above, outline whether Toby has obtained sufficient appropriate evidence for the relevant assertions (where appropriate) pertaining to Johnson Ltd. Justify your choices

Answer rating: 100% (QA)

As per relevant standards of auditing an Auditor when he verifies the account payable then he has to ... View the full answer