10. The following are normal audit activities undertaken as routine in most audits:1. Obtain a sample of employee files and check that their latest pay increases have beencorrectly processed.2. Discuss with the Finance Manager the review process she performs on the end-of-the-periodaccount balance reconciliations.3. Send a letter to the financial institutions listed in the company's register to confirmoustanding loan balances.4. Attend and watch the counting of inventory by the employees at the company's mainwarehouse.5. Reconcile the creditors account balance and agree the result to the client's ownreconciliation.6. Speak to the Finance Manager about the approval process required to write off bad debts.7. Count a sample of high value inventories and agree the results to the client's count totals.8. Watch the company's cashiers count the cash collected at the end of the day.9. Speak to the Finance Manager about the checking process she performs to ensure that leasesare properly classified and disclosed in the financial statements.10. Calculate the discount allowance for a sample of transactions and agree to the client'scalculation.11. Discuss the increase in payment to contractors expense account recorded in this year'sfinancial statements with the Finance Manager.12. Compare this year's salaries and wages expense to this year's budget estimate to determinewhether the budget is accurate.13. Request permission from the Finance Manager to look at a sample of inventory itemsreturned from customers due to poor quality.14. Request permission from the Warehouse Manager to look at inventory items that are unsoldfor more than 12 months. 15. Compare this year's provision for doubtful debts to the prior year's to determine whetherchanges recently made to the debt collection policy is effective.Required:For each activity, state:(a) The type of procedure to collect evidence the audit activity represents, and(b) The type of audit test procedure to which each audit activity relates.You should present your answer in the following table format in your answer booklet:ActivityNo.Type of audit test procedureProcedure to collect evidence

Audit procedures encompass the techniques employed by auditors to scrutinize and evaluate financial…

Required: For each activity, state: (a) The type of procedure to collect evidence the audit activity represents, and (b) The type of audit test procedure to which each audit activity relates. You should present your answer in the following table format in your answer booklet: Activity No. Procedure to collect evidence Type of audit test procedure

Required: For each activity, state: (a) The type of procedure to collect evidence the audit activity represents, and (b) The type of audit test procedure to which each audit activity relates. You should present your answer in the following table format in your answer booklet: Activity No. Procedure to collect evidence Type of audit test procedure

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 35RQSC

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Similar questions

When an auditor sends out bank confirmations at the year-end audit, they are performing a(n) O analytical procedure. O test of the details of balances. O key item test. O test of the details of transactions.
Your client has requested that you assist them in setting up their accounting system and asks that you provide a brief description of what key systems and controls are required to ensure that they produce an accurate set of monthly reports. The client has specifically requested that you include in your comments: the accrual system of accounts preperation, the bank reconciliation, the use of accounting journals, the double entry system and the type of reports to be produced.
You are auditing the December 31, 2021, accounts payable balance of one of your firm's divisions. The division controller's office has provided you with a schedule listing the creditors and the amount owed to each at December 31, 2021, Which of the following audit procedures would be your best choice for determining that no Individual account payable has been omitted from the schedule? A. Send confirmation requests to a randomly selected sample of creditors listed on the schedule B. Send confirmation requests to creditors that are listed on the schedule but not listed on the corresponding December 31, 2020, schedule. C. Examine support for selected 2022 payments to creditors, ascertaining that those relating to 2021 are on this schedule. D. Examine support for selected 2022 payments to creditors, ascertaining that those relating to 2022 are not on the schedule.
Auditors ordinarily ascertain whether payroll checks are properly endorsed during the auditofa. Clock cards.b. The voucher system.c. Cash in bank.d. Accrued payroll.
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…
Sharon, an audit manager assigned to the audit of Newsome Corporation is observing the client's revenue-receivables cycle. Sharon observes that the IT system responsible for processing and posting receivable transactions produces a daily exceptions report which is emailed to an accounts receivable clerk responsible for investigating the exceptions. Which of the following most accurately describes the type of control that is responsible for determining possible exceptions and forwarding them on to the accounts receivable clerk? • This type of control is typically referred to as a detective control. These types of controls usually assist the client in detecting items that need further investigation. These controls help to minimize misstatements in the financial statements. • This type of control is typically known as a manual IT control. This name is derived from the fact that although the control allows initial processing by the client's IT system, it is flagged for manual follow up. •…
Attached is an audit working paper prepared by a new staff auditor based on his testing of a client's bank reconciliation. REQUIRED: Indicate the deficiencies in the working paper prepared by the auditor for the client's bank reconciliation. Be specific with your answers.
Which of the following would provide an auditor with the most reliable evidence reguarding the existence of accounts receivable? A. A copy of the invoice sent to the customer. B. Acopy of the customer's sales order held by the client. C. An accounts receivable confirmation received by the auditor from the client's customer. D. An aging schedule showing the composition of the year-end-accounts receivable balance.
Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? *A. Scan the cash disbursements entries recorded just before year end for indications of unusual transactions.B. Compare a sample of purchase orders issued just after year end with the year-end accounts payable trial balance.C. Obtain a copy of the receiving report until year end and its related sales invoice and trace them to the purchases journal.D. Compare the entries recorded in the purchases journal and the cash disbursements journal just before year end.
Determine whether each of the following procedures is a test of control or a substantive test. a) The auditor inspects a sample of sales orders to determine if the sales manager has approved the orders. b) The auditor sends a confirmation to the bank to verify the cash balance on hand. c) The auditor attends the inventory count and observes client personnel as they conduct the count. d) The auditor recalculates the amount of interest payable. e) Stand by the payroll time clock to determine whether any employee "punches in" more than one time.
When auditing contingent liabilities, which of the following procedures would be MOST effective? a. Reviewing the allowance for doubtful accounts. b. Reviewing the bank cutoff statement. c. Examining customer confirmation replies. d. Examining invoices for repairs expense. e. Abstracting the minutes of the board of directors.
Which of the following audit procedures is aimed most directly at testing the completeness assertion for accounts payable? Footing the list of accounts payable. Tracing shipping reports after year-end to related customer purchase orders and invoices. Examining underlying documentation for cash disbursements in the period after year-end. Tracing shipping reports issued on or before year-end to related customer purchase orders and invoices.