Week 4 ACC 403 Essay

1797 WordsJan 17, 20158 Pages
Homework – Week 4 Desislava Tabakova ACC 403 – Auditing I Professor Ashley Braun Harper November 2, 2014 Chapter 7: Problems 7-29(a-g) and 7-33(a-b) Chapter 8: Problems 8-29(a-d) and 8-32(a-b) 7-29 A-G A- Recorded amount of entries in the acquisition journal 1- Documentation--consists of the client's business documents used to support accounting events. The strength of documentation is that it is prevalent and available at a low cost. Documents can be internal or externally generated. Internal documents provide less reliable evidence than external ones, particularly if the client's internal control is suspect. Documents that are external and have been prepared by qualified individuals such as attorneys or…show more content…
SAS 67 (AU 330) describes two types of confirmations. A positive confirmation asks the respondent to provide an answer in all circumstances, while a negative confirmation asks for a response only if the information is incorrect. As you might predict, negative confirmations are not as competent as positive confirmations. Note that SAS 67 requires confirmation of a sample of accounts receivable due to the materiality of receivables for most companies. 2. Documentation--consists of the client's business documents used to support accounting events. The strength of documentation is that it is prevalent and available at a low cost. Documents can be internal or externally generated. Internal documents provide less reliable evidence than external ones, particularly if the client's internal control is suspect. Documents that are external and have been prepared by qualified individuals such as attorneys or insurance brokers provide additional reliability. The use of documentation in support of a client's transactions is called vouching. It is important to note that electronic records are considered valid documents, per SAS 80. F – Obsolescence of inventory 1. Confirmation--is the receipt of a written or oral response from and independent third party verifying information requested by the auditor. Because of the independence of the third party, confirmations are a highly desirable, though

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