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EP AUDITING+ASSURANCE...-MYACCT.LAB
16th Edition
ISBN: 9780134148656
Author: ARENS
Publisher: PEARSON CO
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Question
Chapter 12, Problem 23DQP
To determine
Evaluate the given internal control independently, and state the controls which must be tested in the current years’ audit of December 31, 2016.
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Students have asked these similar questions
The following are specific balance-related audit objectives applied to the audit of accounts receivable (a. through i.) and management assertions about account balances (1 through 6). The list
referred to in the specific balance-related audit objectives is the list of the accounts receivable from each customer at the balance sheet date.
i (Click the icon to view the audit objectives.)
i (Click the icon to view the management assertions.)
Requirement
For each specific balance-related audit objective, identify the appropriate management assertion. (Hint: See table.)
Specific balance-related audit objective
There are no unrecorded receivables.
b. Uncollectible accounts have been provided for.
C. Receivables that have become uncollectible have been written off.
d.
All accounts on the list are expected to be collected within 1 year.
The total of the amounts on the accounts receivable listing agrees with the
general ledger balance for accounts receivable.
a.
e.
Management assertion
You are working on the audit of Frozen Fresh Ltd and have just completed an evaluation of controls in the sales receivable, and receipt area. You note the following key controls as part of your evaluation a all sales handled were supported by shipping documents. b. All sales once shipped have been invoiced and recorded in the accounting records. C) invoices have been recorded correctly. Required: For each of the controls (a to c)
1. Identity the assertion addressed by the control
2. Provide one common control policies and procedures in the organisation to address the assertions
3. Provide one procedure that could be used to test the control for the key control identified
Indicate whether each of the following audit procedures is a testof controls, a substantive test, or a dual-purpose test. Next, indicate the financial statement assertion most closely related to each audit procedure.
Required:a. Vouch recorded sales invoices to supporting shipping documents.b. Inspect recorded sales invoices for credit approval.c. Vouch recorded sales invoices prices to the approved price list.d. Send confirmations to all customers regarding accounts receivable.e. Recalculate the arithmetic accuracy of the recorded sales invoices.f. Compare the shipment date of recorded sales invoices with the invoice record date.g. Trace recorded sales invoices to posting in the general ledger control account and in the correct customer’s account.h. Select a sample of shipping documents from the shipping department file and trace shipments to recorded sales invoices.i. Scan recorded sales invoices and shipping documents for missing numbers in sequence.j. Vouch sales invoices and…
Chapter 12 Solutions
EP AUDITING+ASSURANCE...-MYACCT.LAB
Ch. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Describe how the nature of evidence used to...Ch. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 8RQCh. 12 - Prob. 9RQCh. 12 - Prob. 10RQ
Ch. 12 - Prob. 11RQCh. 12 - Prob. 12RQCh. 12 - Prob. 13RQCh. 12 - Prob. 14RQCh. 12 - Prob. 15RQCh. 12 - Prob. 16.1MCQCh. 12 - Prob. 16.2MCQCh. 12 - Prob. 16.3MCQCh. 12 - Prob. 17.1MCQCh. 12 - Prob. 17.2MCQCh. 12 - Prob. 17.3MCQCh. 12 - Prob. 18.1MCQCh. 12 - Prob. 18.2MCQCh. 12 - Prob. 18.3MCQCh. 12 - Prob. 19.1MCQCh. 12 - Prob. 19.2MCQCh. 12 - Prob. 19.3MCQCh. 12 - Prob. 20DQPCh. 12 - Prob. 21DQPCh. 12 - Prob. 22DQPCh. 12 - Prob. 23DQPCh. 12 - Prob. 24DQPCh. 12 - Prob. 25DQPCh. 12 - Prob. 26DQPCh. 12 - Prob. 27DQPCh. 12 - A CPAs client, Boos Baumkirchner, Inc., is a...Ch. 12 - Prob. 29DQPCh. 12 - Prob. 30DQPCh. 12 - Based on a cost-benefit analysis, management at...Ch. 12 - Prob. 32DQP
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Similar questions
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- Management Assertions. Your audit manager has asked you to explain the PCAOB assertions by using an account on the balance sheet at your audit client. For the accounts receivable account, please define each of the PCAOB assertions, using the accounts receivableaccount as a way to illustrate each assertion. You are encouraged to reference Exhibit 1.5 tohelp you answer this questionarrow_forwardof stion For a sample of sales transactions selected from the sales journal, verify that the amount of the transaction has been recorded in the correct customer account in the accounts receivable subledger. Choose the Audit Objective: Choose the specific audit objective →arrow_forwardAn audit strategy sets the direction, timing, and scope of an audit. Based on your audit knowledge, which of the following would be included in the audit strategy document? Select one:a. A flowchart of the entity's internal control system.b. The decision as to the combination of substantive testing and tests of control that would be adopted.c. The number of sales transactions to be tested.d. The results of the interim testing of payroll.arrow_forward
- 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.arrow_forward13. Current audit files typically include all the following except: A. Audit program. B. Review notes. C. Internal control documents. D. Current ycar's financial statements. 14. Auditors place more emphasis on A. occurrence B. completeness C. accuracy D. classification assertion when auditing expenses. 15. Recording fictitious sales transactions violates the A. occurrence B. completeness C. accuracy D. classification assertion of sales. 16. An auditor has the responsibility to actively search for subsequent events that occur prior to the: A. client visit date. B. date of the auditor's report. C. balance sheet date. D. date of the management representation letter. 17. When there is a material non-adjusting subsequent event noticed by the auditor, the auditor should consider: A. to issue unqualified opinion as it is non-adjusting event. B. to issuc qualificd opinion since it is matcrial. C. the adequacy of disclosure in footnotes. D. the effect to the financial statement users. 18.…arrow_forwardAssume that your audit partner has asked you to design detailed substantive testingprograms for the accounts receivable and sales; inventory; purchases and accountspayable; and payroll systems of Square Pharma. Your partner also asked you toincorporate all or some of the following types of tests: Specific analytical procedures,tests of detail (i.e. direct tests on balances and tests of transactions of a balance).While designing the testing programs, assume that the Tests of Control identifythe weaknesses as described in each of the following situations, but no other. Insummary:(a)Consider the control weaknesses for each subsystem as set out below; (b)Design and develop a substantive audit tests program using information fromlast three year annual reports and explain and justify your audit program in termsof audit objectives (also called 'audit assertions' )Note: The risk situations below are created for purposes of teaching and bear norelationship to events in Briscoe Group Ltd or any…arrow_forward
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