Statement 1: Common to future purchase commitments is the fact that they should be recorded as liabilities at discounted values as of year-end. Statement 2: Analytical procedures are required as a part of the. Internal control assessment. Statement 3: Auditors should perform audit procedures relating to subsequent events through issuance of the audit report. A. only one statement is true B. only two statements are true C. All are true D. All are false

Statement 1: Common to future purchase commitments is the fact that they should be recorded as liabilities at discounted values as of year-end. Statement 2: Analytical procedures are required as a part of the. Internal control assessment. Statement 3: Auditors should perform audit procedures relating to subsequent events through issuance of the audit report. A. only one statement is true B. only two statements are true C. All are true D. All are false

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

Chapter14: Completing A Quality Audit

Section: Chapter Questions

Problem 19CYBK

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Before applying substantive procedures to the details of asset and liability accounts at an interim date, the auditor should: Mutiple Choice consider the sblity of the suditor to perform aporopriate substartive procedures to cover the remaining period. investigete significant uctiations thet have occured in the asset and lability accounts since the previous balance sheet date. select only those accounts wich can eflectively be samplied during year end audit work consider the compliance tests that mut be applied at the balance sheet date to extend the audit conclusions reached at the interim date.
Assume an auditor wishes to execute a meaningful analytical technique to offer audit evidence to assess EarthWear's $983,00 interest expense valuation or allocation allegation in 2018. The auditor will accomplish this by calculating an estimate of what the interest cost should be. What is a fair expectation estimate for the auditor?
if the auditor want to assure that Receivables have not been sold. What assertion he or she want to test : Select one: a. Existence b. Completeness c. Rights and obligations d. Valuation and allocation
Which of the following timing of inventory count is the best based on the auditor’s point of view when the control risk is assessed at maximum and when there is a high inherent risk for the client? A. Inventory count just after year-endB. Inventory count at year-endC. Inventory count just before year-endD. All of the following are equal and the auditor can choose oneE. Inventory count must be done before year-end, at year-end and after year-end
Suppose an auditor wants to perform a substantive analytical procedure to provide audit evidence to test EarthWear’s valuation or allocation assertion for interest expense of $983,00 in 2018. To do this, the auditor will calculate an expectation for what the interest expense should be. What would be a reasonable calculation for the auditor’s expectation?
Answer the following subquestion as a result of an audit: a. How much is the correct carrying value of the notes payable as of December 31, 2023? b. How much is the correct interest expense that Meekah should recognized in the December 31, 2023 statement of comprehensive income? c. How much of the note is reported in the non-current liability section of the December 31, 2023 statement of financial position?
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
Which of the following audit procedures is the best test of the accuracy, valuation and allocation assertion for inventory? Select one: a. Obtaining the last receiving record numbers for the period and checking that they were taken up correctly b. Confirming stock held on consignment c. Comparing standard costs to actual sales prices. d. Attending the annual stocktake
Audit tests include tests of controls and substantive procedures. Substantive procedures can be divided into substantive analytical procedures, tests of balances, tests of transactions and tests of disclosures.Required:For each test in the table below, select the type of audit test it represents. 1.Examine the financial report to determine whether all related party loans are properly presented2.Recalculate depreciation figure3.Trace sales recorded in the sales journal to shipping documents4.Examine sales invoices for initials to indicate that prices and extensions have been checked5.Check the cost of closing inventory to subsequent sales prices6.Confirm loan balances with financial institutions
For each of the accounts balances and associated assertions below, select the audit procedure from the list provided that gives the most appropriate audit evidence for the account assertion. Accounts Balance Assertion Procedure Inventory Completeness a. Examine invoices from suppliers. b. Examine invoices paid after year-end and trace to subsidiary ledger. c. Select items located in the inventory warehouse and trace to the inventory listing. d. Trace sales invoices and shipping documents just after year-end to customer accounts. Cash Rights and obligations a. Agree bank statement to the subsidiary ledger. b. Agree the cash balance per the bank reconciliation to the year-end bank statement. c. Review the bank confirmation for information on compensating balances. d. Trace deposits per the bank statement to the cash subsidiary ledger. Accounts Receivable Existence a. Review confirmation of accounts receivable…
An auditor must identify the relevant assertions about each significant financial statement account and disclosure and then gather evidence to conclude whether a material misstatement exists for each assertion. The nature of each financial statement account and disclosure contributes to the likelihood that a material misstatement exists.a. In general, which accounts are most susceptible to overstatement? To understatement?b. Why do you think a company could permit asset accounts to be understated?c. Why do you think a company could permit liability accounts to be overstated?d. Which direction of misstatement is most likely: income overstatement or income understatement?
(a) Audit tests include tests of controls and substantive procedures. Substantive procedures canbe divided into substantive analytical procedures, tests of balances, tests of transactions andtests of disclosures.Required:For each test in the table below, select the type of audit test it represents. ( 30-50)words)Test Type of test ?1 Examine the financial report to determine whether all related party loans are properly presented 2 Recalculate depreciation figure 3 Trace sales recorded in the sales journal to shippingdocuments4 Examine sales invoices for initials to indicate that pricesand extensions have been checked5 Check cost of closing inventory to subsequent sales prices6 Confirm loan balances with financial institutions (b) You are the audit senior on the audit of Marsa Ltd, a large manufacturing company, for theyear ended 30 June 2020. It…