For the audit of Carbald Supply Company, CaroleWever, CPA, is conducting a test of sales for 9 months of the year ended December 31,2013. Included among her audit procedures are the following:1. Foot and cross-foot the sales journal and trace the balance to the general ledger.2. Review all sales transactions for reasonableness.3. Select a sample of recorded sales from the sales journal and trace the customername and amounts to duplicate sales invoices and the related shipping document.4. Select a sample of shipping document numbers and perform the following tests:a. Trace the shipping document to the related duplicate sales invoice.b. Examine the duplicate sales invoice to determine whether copies of the shippingdocument, shipping order, and customer order are attached.c. Examine the shipping order for an authorized credit approval.d. Examine the duplicate sales invoice for an indication of internal verificationof quantity, price, extensions, footings, and trace the balance to the accountsreceivable master file.e. Compare the price on the duplicate sales invoice with the approved price listand the quantity with the shipping document.f. Trace the balance in the duplicate sales invoice to the sales journal and accountsreceivable master file for customer name, amount, and date.a. For which of these procedures can audit sampling for exceptions be convenientlyused?b. Considering the audit procedures Wever developed, what is the most appropriatesampling unit for conducting most of the audit sampling tests?c. Set up a sampling data sheet using attributes or nonstatistical sampling. For all testsof controls, assume a TER rate of 5% and an EPER of 1%. For all substantive tests oftransactions, use a 4% TER and a 0% EPER. Use a 10% ARO for all tests.
For the audit of Carbald Supply Company, Carole
Wever, CPA, is conducting a test of sales for 9 months of the year ended December 31,
2013. Included among her
1. Foot and cross-foot the sales journal and trace the balance to the general ledger.
2. Review all sales transactions for reasonableness.
3. Select a sample of recorded sales from the sales journal and trace the customer
name and amounts to duplicate sales invoices and the related shipping document.
4. Select a sample of shipping document numbers and perform the following tests:
a. Trace the shipping document to the related duplicate sales invoice.
b. Examine the duplicate sales invoice to determine whether copies of the shipping
document, shipping order, and customer order are attached.
c. Examine the shipping order for an authorized credit approval.
d. Examine the duplicate sales invoice for an indication of internal verification
of quantity, price, extensions, footings, and trace the balance to the accounts
receivable master file.
e. Compare the price on the duplicate sales invoice with the approved price list
and the quantity with the shipping document.
f. Trace the balance in the duplicate sales invoice to the sales journal and accounts
receivable master file for customer name, amount, and date.
a. For which of these procedures can audit sampling for exceptions be conveniently
used?
b. Considering the audit procedures Wever developed, what is the most appropriate
sampling unit for conducting most of the audit sampling tests?
c. Set up a sampling data sheet using attributes or nonstatistical sampling. For all tests
of controls, assume a TER rate of 5% and an EPER of 1%. For all substantive tests of
transactions, use a 4% TER and a 0% EPER. Use a 10% ARO for all tests.
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