Answered: List the eight balance-related audit…

List the eight balance-related audit objectives in the verificationof the ending balance in inventory and provide one useful audit procedure for each ofthe objectives

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter11: Auditing Inventory, Goods And Services, And Accounts Payable: The Acquisition And Payment Cycle

Section: Chapter Questions

Problem 5RQSC

See similar textbooks

Related questions

Q: what work will an auditor carry out prior to the commencement of the inventory count.

A: The audit procedure follows by the auditor for identifying he evidences regarding the accuracy and…

Q: Identify the type of audit evidence used for each of the audit procedure above. Explain TWO (2)…

A: Audit evidence are the evidence an auditor collects while doing procedures to reach on a conclusion.

Q: Do you apply the LCNRV method to each individual item, to a category, or to the total of the…

Q: Changing the method of inventory valuation should be reported in the financial statements under what…

A: Inventory- A manufacturing company's inventory is a critical current asset. Inventory refers to the…

Q: Explain what is meant by the Internal Revenue Service conformity rule with respect to the inventory…

A: Internal Revenue Service conformity rule is when prices rise and inventory quantities are not…

Q: The tests of controls for inventory records would include the following procedures. A. Existence. B.…

A: 1. C Trace a sample of sales invoices to perpetual inventory record entry of issue. Completeness 2.…

Q: In the auditor's perspective, what is the ideal timing of the inventory count procedures? * A.…

A: Inventory Count Procedure - Inventory count procedure includes checking of financial records with…

Q: A typical substantive procedure for inventory balance and purchase transactions may include…

A: The question is related to the Substantive audit procedures. The Substantive audit procedures are…

Q: what are the audit asssertions related to inventory?

A: Audit is the process of checking and examining books of accounts and financial statements so that it…

Q: A В D REQUIRED: IDENTIFY THE ASSERTION[S] RELATED TO EACH AUDIT PROCEDURE ASSERTION[S] E= existence…

A: Audit Procedure:- An audit procedure is referred as the procedure which is used by the auditor to…

Q: Which of the following is a substantive test in relation to completeness? a. Inspect physical…

A: Inspect physical inventory, checking from inventory records to physical stock is an Audit assertion…

Q: An auditor usually traces the details of the test counts made during the observation of physical…

A: An auditor traces the details of test counts of physical inventory to final inventory compilation in…

Q: What is the main distinction between perpetual and periodic inventory systems? Which type of system…

A: Explain the main distinction between perpetual inventory system and periodic inventory system and to…

Q: When auditing merchandise inventory at year-end, the auditor performs audit procedures to obtain…

A: Goods received on consignment shall not be included in the inventory of consignee.

Q: Explain the appropriate accounting treatment required when a change in inventory method is made.

A: Definition: Change in inventory method: Change in inventory method is said to be the difference…

Q: When auditing merchandise inventory at year-end, the auditor performs audit procedures toensure that…

A: option B) Existence

Q: The inventory is added to the inventory records after three documents are reconciled. One of those…

A: To add the inventory to the inventory records, the documents are reconciled which records the…

Q: An auditor selected items for test counts while observing a client’s physical inventory.The auditor…

A: Qualitative characteristics of Accounting Information System: Qualitative characteristics are…

Q: Understand and apply rules for measurement of inventory at the end of the reporting period.

Q: Explain the audit for inventory

A: Directional testing is been used to audit the procedures of statement of financial position items.

Q: A REQUIRED: IDENTIFY THE ASSERTION[S] RELATED TO EACH AUDIT PROCEDURE ASSERTION[S] E=existence…

A: Auditing:- An audit is the referred as the physical examination of books of accounts. This can be…

Q: Prepare a data flow diagram and a system flowchart of the expenditure cycle procedures previously…

A: Expenditure Cycle: The expenditure cycle is defined as the set of activities that are related to…

Q: Which of the following best describes the reason that the auditors record their inventory test…

A: Working paper is the document prepared in the process of Audit. Working paper are prepared by…

Q: When auditing merchandise inventory at year-end, the auditor performs audit proceduresto obtain…

A: Given information is: When auditing merchandise inventory at year-end, the auditor performs audit…

Q: The purpose of tracing a sample of inventory tags to a client’s computerized listing of inventory…

Q: In your own words, discuss the differences between a perpetual and periodic inventory system. Your…

A: Inventory is the current asset posted on the balance sheet of the company.

Q: There are at least five internal controls that must be applied when taking a physical count of…

A: Internal control procedures are those procedures which are implemented for the achievement of…

Q: An auditor would vouch inventory on the inventory status report to the vendor’s invoice toobtain…

A: Management assertion: Management assertion refers to the claim made by the management ensuring the…

Q: What is the primary reason we perform physical inventory observations? A. To obtain sufficient…

A: Inventory : It is the stock of raw material work in process and finished goods Kept in the store for…

Q: Which of the following auditing procedures probably would provide the most reliable evidence…

A: Trace test counts noted during the entity’s physical count to the entity’s summarization of…

Q: Identify the eight accounts receivable balance-related audit objectives. For each objective, list…

A: Balance related Audit Objective Audit Procedures 1) In the aged trial balance receivables match…

Q: List and explain the substantive tests of Inventory and give example.

A: Substantive procedures are exercised by an auditor to detect material misstatements at the financial…

Q: An auditor selected items for test counts from the client’s warehouse during the physical inventory…

A: Definition: Management assertion: Management assertion refers to the claim made by the management…

Q: audit of a client's inventory balance

A: Option a is wrong because the difference may be attributable to the estimate made by the auditor.…

Q: Provide a critique of the accounting policy for inventory included in the financial statement in…

A: The accounting standard prescribes the accounting treatment for inventories and sets the guidelines…

Q: Assuming that the auditor properly documents receiving reportnumbers as a part of the physical…

A: Cut off procedures are those procedures in which the departments in the business would have their…

Q: Refer to Exhibit 6.5 to identify the nine types of audit procedures used as part of the audit…

A: PLEASE LIKE THE ANSWER, YOUR RESPONSE MATTERS Procedure Type of procedure Assertion Tested…

Q: Below are five audit procedures, all of which are tests of transactions associated with the audit of…

A: The audit objectives have been defined as below A. Occurrence-to ensure the existence of given…

Q: which six key factors commonly contribute to the risk of misstatement of the assertion of inventory?

A: The wrong information or incorrect accounting information represented in the financial statement is…

Q: A typical substantive procedure for inventory balance and purchase transactions may include…

A: Should disclose separately in Financial statements and notes to accounts

Concept explainers

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.

Question

List the eight balance-related audit objectives in the verification
of the ending balance in inventory and provide one useful audit procedure for each of
the objectives

Definition Definition Methods and techniques used by the auditor to gather the appropriate evidence so that a true and fair judgment can be made on the quality of the financial statements of the client. Audit procedures are developed after determining audit objectives, scope, approach, and risk assessment.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Audit procedures for items of Financial Statement

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Explain the parts of the audit of the inventory cycle.
Which of the following management assertions is an auditor most likely testing if the audit objective states that all inventory on hand is reflected in the ending inventory balance?a. The entity has rights to the inventory.b. Inventory is properly valued.c. Inventory is properly presented in the financial statements.d. Inventory is complete
The tests of controls for inventory records would include the following procedures.A. Existence.B. Rights.C. Completeness.D. Valuation.E. Presentation and disclosure.For each of the procedures, choose the letter of the correct PCAOB assertion(s). Only one letter per procedure should be used._______ 1. Trace a sample of sales invoices to perpetual inventory record entry of issue._______ 2. Select a sample of inventory item from perpetual records and vouch additions to receiving reports._______ 3. Select a sample of shipping documents and review the accounting summary of the quantities and prices._______ 4. Trace posting of sample of sales invoices to amounts in general ledger._______ 5. Review the appropriateness of standard costs to price inventory issues and cost of goods sold
As part of your audit of a client's inventory balance, you created an expectation of what should be the inventory balance by using the gross profit method. The difference between your expectation using the gross profit method of estimating inventory as against the client reported balance is above audit materiality level for audit of inventory. What should you do next? a. Discuss with the management the implication of the significant difference and propose an adjusting journal entry accordingly.b. Extend audit procedures by doing further analytical procedures on the inventory balance.c. Extend audit procedures by doing test of details of the account balance.d. Issue a qualified opinion on the basis of a material misstatement in the client's inventory.e. None of the above
the auditor picks an item of inventory from the warehouse and determines whether it is included in the entity's list of inventories a. existence b. completeness c. accuracy d. rights
Which of the following audit procedures probably would provide the most reliable evidence related to the entity’s assertion of rights and obligations for the inventory account?a. Trace test counts noted during physical count to the summarization of quantities.b. Inspect agreements for evidence of inventory held on consignment.c. Select the last few shipping advices used before the physical count and determine whether the shipments were recorded as sales.d. Inspect the open purchase order file for significant commitments to consider for disclosure.
When auditing merchandise inventory at year-end, the auditor performs audit procedures toensure that all goods purchased before year-end are received before the physical inventorycount. This audit procedure provides assurance about which management assertion?a. Cutoff.b. Existence.c. Valuation and allocation.d. Rights and obligations.e. Occurrence.
1. What is the primary reason we perform physical inventory observations? A. To obtain sufficient appropriate audit evidence over the existence and condition of inventory to meet the objectives of the professional auditing standards B. To obtain sufficient appropriate audit evidence that inventory is recorded at the correct cost on the financial statements C. To provide assurance over the time it takes inventory to leave the warehouse and arrive at the customer D. To verify assumptions used in management's estimates regarding inventory reserves 2. What piece of information gained during the understanding of the inventory process would be LEAST relevant to the scoping of inventory locations? A. The company hired a new count supervisor for one of their largest locations B. Book to physical adjustments were material in the prior year for 2 locations C. Cycle count accuracy rates have been greater than management's targets in the prior year and current year to date D. WIP inventory takes…
When auditing merchandise inventory at year-end, the auditor performs audit procedures to obtain evidence that no goods held on consignment are included in the client’s ending inventory balance. This audit procedure provides assurance about which management assertion Select one: a. Existence b. Valuation and allocation c. Completeness d. Occurrence e. Rights and obligations
An auditor usually traces the details of the test counts made during the observation of physical inventory counts to a final inventory compilation. This audit procedure is undertaken to provide evidence that items physically present and observed by the auditor at the time of thephysical inventory count area. Owned by the client.b. Not obsolete.c. Physically present at the time of the preparation of the final inventory schedule.d. Included in the final inventory schedule.
Choose the one correct answer. As part of your audit of a client's inventory balance, you created an expectation of what should be the inventory balance by using the gross profit method. The difference between your expectation using the gross profit method of estimating inventory as against the client reported balance is above audit materiality level for audit of inventory. What should you do next? a. Discuss with the management the implication of the significant difference and propose an adjusting journal entry accordingly.b. Extend audit procedures by doing further analytical procedures on the inventory balance.c. Extend audit procedures by doing test of details of the account balance.d. Issue a qualified opinion on the basis of a material misstatement in the client's inventory.e. None of the above
Describe any 4 (Four) substantive procedures the auditor should perform to obtain sufficient and appropriate audit evidence in relation to the matters identified regarding the inventory valuation of Polobalancing Dog products.