Question 3 Which of the following is an analytical procedure that an auditor most likely would perform when planning an audit? 1. Scanning payroll files for terminated employees. 2. Confirming a sample of accounts payable. 3. Comparing current year balances to budgeted balances. 4. Recalculating interest expense based on notes payable balance. 0 4 O 1 O 2 3.

Question 3 Which of the following is an analytical procedure that an auditor most likely would perform when planning an audit? 1. Scanning payroll files for terminated employees. 2. Confirming a sample of accounts payable. 3. Comparing current year balances to budgeted balances. 4. Recalculating interest expense based on notes payable balance. 0 4 O 1 O 2 3.

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

Chapter10: Auditing Cash, Marketable Securities, And Complex Financial Instruments

Section: Chapter Questions

Problem 21RQSC

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MULTIPLE CHOICE: 1. An auditor ordinarily sends a standard confirmation request to all banks with which the client has done business during the year under audit, regardless of the year-end balance. A purpose of this procedure to A. request a cutoff bank statements and related checks be sent to the auditor B. Detect kiting activities that may otherwise not be discovered C. Seek information about contingent liabilities and security agreements D. Provide the data necessary to prepare proof of cash 2. As one of the year-end audit procedures , the auditor instructed the client’s personnel to prepare a standard bank confirmation request for a bank account that had been closed during the year. After the client’s treasurer had signed the request , it was mailed by the assistant treasurer. What is the major flaw in this audit procedure? A. The request was mailed by the assistant treasurer B. The CPA did not sign the confirmation request before it was mailed C. Sending the request was…
H6. Question 15 During an audit, you are selecting a sample of transactions from the vouchers payable register at the end of the period and tracing them to underlying documents. By doing this, you are gathering evidence primarily to support that: Incurred obligations were recorded in the correct period Recorded obligations were paid Recorded obligations occurred prior to year-end 1 pts Cash disbursements were recorded as incurred obligation Please show all step by step calculation
A1) Which of the following would the auditor most likely perform when auditing the bank reconciliation for a December 31 year-end audit? a. Confirm the audit client’s book balance shown on the bank reconciliation directly with the bank. b. Verify the audit client’s book balance shown on the bank reconciliation to the Cash balance in the audit client’s trial balance and general ledger. c. Subtract the outstanding check amounts from the audit client’s book balance. d. Verify the deposits in transit amounts to the audit client’s December bank statement.
2. In determining the validity of accounts receivable, which of the following would the auditor consider most reliable? a. Direct telephone communication between the auditor and debtor b. Confirmation replies received directly from customers c. Credits to accounts receivable from the cash receipts book after the close of business at year end d. Documentary evidence that supports the accounts receivable balance
Question 39 An auditor is required to confirm accounts receivable if the accounts receivable balances are: Older than one year Material to the financial statements Smaller than esxpected Subject to valuation estimates
PROBLEM 2 You are revisiting the audit working paper presented to you by your audit staff in line with his audit procedures done in auditing T-ara Corporation’s accounts receivable. The following were lifted from the said working papers: Audit notes: T-ara Corporation’s accounts receivable subsidiary ledger had the following details: Customers Invoice Date Invoice Amount Balance Park Ji-yeon Inc. 12/06/22 127,000 10/29/22 84,000 211,000 Hyomin Company 12/30/22 42,000 09/27/22 30,000 08/20/22 53,520 125,520 Hahn Eunjung Inc. 12/30/22 40,000 12/08/22 80,000 11/25/22 63,600 183,600 Park So-yeon Company 11/17/22 138,840 10/09/22 132,000 08/20/22 74,400 345,240 Jeon Boram Corporation 12/10/22 250,000 250,000 Qri Incorporated 09/12/22 104,400 104,400 Total 1,219,760 The…
Quesion 1: The following are various potential misstatements due to errors or fraud (1 through 7), and a list of auditing procedures (a. through h.) the auditor would con- sider performing to gather evidence to determine whether the error or fraud is present possible Misstatements Due to errors or Fraud 1. The auditor suspects that a lapping scheme exists because an accounting department employee who has access to cash receipts also maintains the accounts receivable led- ger and refuses to take any vacation or sick days. 2. The auditor suspects that the entity is inappropriately increasing the cash reported on its balance sheet by drawing a check on one account and not recording it as an outstanding check on that account and simultaneously recording it as a deposit in a second account. 3. The entity’s cash receipts of the first few days of the subsequent year were properly deposited in its general operating account after the year-end. However, the auditor suspects that the entity…
The following are 11 audit procedures taken from an auditprogram:1. Foot the accounts payable trial balance and compare the total with the general ledger.2. Confirm accounts payable balances directly with vendors.3. Account for a sequence of checks in the cash disbursements journal to determinewhether any have been omitted.4. Examine vendors’ invoices to verify the ending balance in accounts payable.5. Compare the balance in payroll tax expense with previous years. The comparisontakes the increase in payroll tax rates into account.6. Examine the internal auditor’s initials on monthly bank reconciliations as anindication of whether they have been reviewed.7. Examine vendors’ invoices and other documentation in support of recorded transactions in the acquisitions journal.8. Multiply the commission rate by total sales and compare the result with commissionexpense.9. Examine vendors’ invoices and other supporting documents to determine whetherlarge amounts in the repair and maintenance…
Alyssa Ghose is auditing payroll accruals for a manufacturingcompany. The client has accrued payroll taxes, accrued vacation pay, and accrued bonusesfor salespersons as of the end of the fiscal year. Alyssa performed the following auditprocedures.1. Compared all accrual balances in the current year to the prior year and noted nosignificant fluctuations.2. Traced the subsequent payment of payroll taxes to the cash disbursements journaland the bank statement.3. Reviewed a sample of contracts with salespersons to verify the bonus formula.4. Reviewed cancelled checks for a sample of checks disbursed after year end for unusedvacation pay.a. Are the audit procedures performed by Alyssa sufficient to test accrued payroll tax,vacation pay, and bonuses? If not, what additional procedures should she perform?b. For each additional procedure you recommend in part a., identify the related auditobjective the procedure would satisfy.
5. Which of the following auditing procedures would the auditor not apply to a cutoff bank statement? A. Trace year end outstanding checks and deposits in transit to the cutoff bank statement B. Reconcile the bank account as of the end of the cutoff period C. Compare dates, payees and endorsements on returned checks with the cash disbursements record D. Determine that the year-end deposit in transit was credited by the bank on the first working day of the following accounting period.
asap F Identify the primary audit objectives that auditors hope to accomplish by confirming a client's year-end accounts receivable. Explain the difference between "positive" and "negative" confirmation requests and discuss the quality of audit evidence yielded by each.
Question 21 The auditing cash is an important audit function. Provide four audit procedures that are most often applied when auditing a client's year-end bank reconciliation.