egarding the confirmation of accounts payable is true? Group of answer choices The confirmation of accounts payable must be done exclusively by the internal audit staff. The confirmation of accounts payable is an important method of establishing the existence of unrecorded accounts payable. The confirmation of accounts payable contributes little or nothing in determining unrecorded accounts payable exist.

egarding the confirmation of accounts payable is true? Group of answer choices The confirmation of accounts payable must be done exclusively by the internal audit staff. The confirmation of accounts payable is an important method of establishing the existence of unrecorded accounts payable. The confirmation of accounts payable contributes little or nothing in determining unrecorded accounts payable exist.

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter2: Audits Of High-risk Accounts

Section2.6: Cbi Holding Company, Inc.

Problem 2Q

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Question 23 Which of the following statements is correct regarding accounts payable and the auditor's procedures? Group of answer choices Because it is generally more difficult to discover a transaction that has not been recorded than to discover one that has been recorded incorrectly, the audit objective of completeness drives many of the substantive procedures applied to these balances. A judgment whether an unrecorded payable should be recorded before the financial statements are prepared depends entirely upon the source of the payable. The confirmation of accounts payable selected from the year-end trial balance of such accounts is most effective in discovering unrecorded liabilities. Unrecorded payables are often discovered through examining vouchers payable entered into the voucher register prior to the balance sheet date.
29-Members of the audit engagement team are required to discuss the susceptibility of the entity's financial statement due to fraud. The susceptibility of fraud refers to_ O a. None of the options O b. Likelihood of fraud in the financial statement O c. Pre-existing fraud in the financial statements O d. Non-deliberate misstatement of financial statements
Question 4 If the auditor obtains sufficient evidence on a client's accounts receivable balance through alternative procedures because it is impractical to confirm accounts receivables, the auditor's opinion should be unqualified and could expect to: disclose the fact that alternative procedures were used due to client imposed restrictions. Avoid mentioning the alternative procedures disclose in the audit opinion that confirmation of accounts receivables was impracticable include a paragraph that discloses the performance of the alternative procedures
12 The overall objective in the audit of the acquisition and payment cycle is: Group of answer choices to evaluate whether the affected accounts are fairly presented in accordance with accounting standards. to ensure the reliability of the affected accounts. to ensure the accuracy of the affected accounts. to evaluate whether fraudulent payments were made.
Choose the one correct answer. Which of the following statements is invalid relating to confirmation of accounts receivable? a. A negative form of confirmation is preferable to use when individual account balances of customers are relatively smallb. A positive confirmation provides more reliable evidence than the negative confirmation because the auditor can perform follow-up procedures if no response is received from the debtorc. An auditor must consider using the negative form of confirmation when there is reason to believe that there may be a substantial number of accounts in dispute or with inaccuracies or irregularitiesd. In negative confirmation, failure to reply must be regarded as a correct response, even though the debtor may have ignored the confirmation requeste. None of the above
True or False1. When the auditor seeks evidence concerning the allowance for doubtful accounts he or she would most likely use an aged trial balance to help identify past due balances. 2. Current auditing standards do not require the confirmation of receivables if accounts receivable are not material. 3. Accounts receivable confirmations should be prepared on the auditing firm's letterhead. 4. Alternative procedures to the confirmation of receivables include review of subsequent collections and examination of supporting documents. 5. Lapping of accounts receivable is least likely to occur when there is an inadequate segregation of duties. 6. Positive accounts receivable confirmations should be used on all accounts which represent small immaterial balances. 7. When the client has a large number of relatively small accounts receivable and the assessed level of control risk for receivables and related revenue transactions is high, the auditor is more likely to use negative…
Items 1 through 6 are questions typically found in a standardinternal control questionnaire used by auditors to obtain an understanding of internalcontrol for notes payable. In using the questionnaire for a client, a “yes” response indicatesa possible internal control, whereas a “no” indicates a potential deficiency.1. Are liabilities for notes payable incurred only after written authorization by a propercompany official?2. Are paid notes cancelled and retained in the company files?3. Is a notes payable master file maintained?4. Is a periodic reconciliation made of the notes payable master file with the actualnotes outstanding by an individual who does not maintain the master file?5. Is the individual who maintains the notes payable master file someone other thanthe person who approves the issue of new notes or handles cash?6. Are interest expense and accrued interest recomputed periodically by an individualwho does not record interest transactions?a. For each of the preceding…
3. An auditor should perform alternative procedures to substantiate the existence of accounts receivable when a. Pledging of the receivables is probable b. No reply to a negative confirmation request is received c. No reply to a positive confirmation request is received d. Collectibility of the receivable sis in doubt
Choose the one correct answer Which of the following statements is valid relating to confirmation of accounts receivable? * a. A positive confirmation provides more reliable evidence than the negative confirmation because the auditor can perform follow-up procedures if no response is received from the debtorB. A negative form of confirmation is preferable to use when individual account balances of customers are relatively largec. In positive confirmation, failure to reply must be regarded as a correct response, even though the debtor may have ignored the confirmation requestd. An auditor must consider using the negative form of confirmation when there is reason to believe that there may be a substantial number of accounts in dispute or with inaccuracies or irregularitiese. None of the above
Which of the following statements is invalid relating to confirmation of accounts receivable? a. A negative form of confirmation is preferable to use when individual account balances of customers are relatively smallb. A positive confirmation provides more reliable evidence than the negative confirmation because the auditor can perform follow-up procedures if no response is received from the debtorc. An auditor must consider using the negative form of confirmation when there is reason to believe that there may be a substantial number of accounts in dispute or with inaccuracies or irregularitiesd. In negative confirmation, failure to reply must be regarded as a correct response, even though the debtor may have ignored the confirmation requeste. None of the above
Under which clause of ISA, the auditor's responsibilities relating to prevention and detection of errors and frauds in audit of financial statements are considered only secondary? a. ISA 240 (Redrafted) paragraph 10 b. ISA 250 (Redrafted) paragraph 4 c. ISA 250 (Redrafted) paragraph 10 d. ISA 240 (Redrafted) paragraph 4
Which of the following is most closely related to the relevance of audit evidence?a. Auditors decide to physically inspect investment securities held by a custodian instead of obtaining confirmations from the custodian.b. In addition to confirmations of accounts receivable, auditors perform an analysis of the aging of accounts receivable to evaluate the collectability of accounts receivable.c. In response to less effective internal control, auditors increase the number of customer accounts receivable confirmations mailed compared to that in the prior year.d. Because of a large number of transactions occurring near year-end, auditors decide to confirm a larger number of receivables following year-end instead of during the interim period.