You are auditing Adelaide Pty Ltd (Adelaide). You are at the planning stage of the audit...

 

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You are auditing Adelaide Pty Ltd (Adelaide). You are at the planning stage of the audit and you ask members of your audit team to suggest how to optimise evidence collection so that you have reliable evidence and stay within budget for the audit. Your team members are enthusiastic about being asked to contribute and make many suggestions. Your assistant records the suggestions and lists them for you. The list includes the following suggestions, which are not in any particular order. a. Enquire with management to determine if they have provided written instructions to staff for performing the inventory count. b. Inspect the general ledger account to ascertain the ending cash balance. c. Perform an ageing of debtors d. Perform a bank confirmation. e. Observe the inventory count. f. Enquire with the Chief Financial Officer about the results of his review of correspondence received from debtors. REQUIRED: The list above contains three pairs of statements. Each pair relates to a specific item that is to be audited. For each pair, identify the audit evidence gathering procedure that you believe to be the more reliable, and the procedure you believe to be the less reliable. Explain your selections. You are auditing Adelaide Pty Ltd (Adelaide). You are at the planning stage of the audit and you ask members of your audit team to suggest how to optimise evidence collection so that you have reliable evidence and stay within budget for the audit. Your team members are enthusiastic about being asked to contribute and make many suggestions. Your assistant records the suggestions and lists them for you. The list includes the following suggestions, which are not in any particular order. a. Enquire with management to determine if they have provided written instructions to staff for performing the inventory count. b. Inspect the general ledger account to ascertain the ending cash balance. c. Perform an ageing of debtors d. Perform a bank confirmation. e. Observe the inventory count. f. Enquire with the Chief Financial Officer about the results of his review of correspondence received from debtors. REQUIRED: The list above contains three pairs of statements. Each pair relates to a specific item that is to be audited. For each pair, identify the audit evidence gathering procedure that you believe to be the more reliable, and the procedure you believe to be the less reliable. Explain your selections.

Answer rating: 100% (QA)

Solution The below are the three pairs of statements relates to each item being audited with audit e... View the full answer