Week 3 Assignment – Assertions and Audit Evidence
Week 3 assignment – Assertions and Audit evidence
ACC 490
September 17, 2012
5-30 | (Assertions) In planning the audit of a client's financial statements, an auditor identified the following issues that need audit attention. | 1. The allowance for doubtful accounts is fairly presented in amount. * Valuation or allocation assertion 2. All accounts payable owed as of the balance sheet date are included in the financial statements. * Existence or occurrence assertion 3. All purchase returns recorded in the general ledger are valid. * Existence or occurrence assertion 4. The allowance for doubtful accounts is fairly presented in amount. * Valuation or allocation assertion 5. All accounts payable owed as of the balance sheet date are included in the financial statements. * Completeness assertion 6. All purchase returns recorded in the general ledger are valid. * Existence or occurrence assertion 7. A retail client values its inventory using the retail method of accounting. * Valuation or allocation assertion 8. A construction client uses the percentage of completion method for recognizing revenues. * Existence or occurrence assertion 9. A client has a defined benefit pension plan and does not have competent employees to write footnote disclosures. * Presentation and disclosure assertion – classifications and understandability 10. Slow-moving items included in inventory have been properly identified and priced. * Valuation or allocation assertion 11. A client financed the acquisition of assets using preferred stock that pays a 3 percent dividend and must be redeemed from the shareholders next year. * Rights and obligations assertion 6-22 | (Audit evidence) During the course of an audit, the auditor examines a wide variety of documentation. Listed below are some forms of documentary evidence and the sources from which they are
ACC 490
September 17, 2012
5-30 | (Assertions) In planning the audit of a client's financial statements, an auditor identified the following issues that need audit attention. | 1. The allowance for doubtful accounts is fairly presented in amount. * Valuation or allocation assertion 2. All accounts payable owed as of the balance sheet date are included in the financial statements. * Existence or occurrence assertion 3. All purchase returns recorded in the general ledger are valid. * Existence or occurrence assertion 4. The allowance for doubtful accounts is fairly presented in amount. * Valuation or allocation assertion 5. All accounts payable owed as of the balance sheet date are included in the financial statements. * Completeness assertion 6. All purchase returns recorded in the general ledger are valid. * Existence or occurrence assertion 7. A retail client values its inventory using the retail method of accounting. * Valuation or allocation assertion 8. A construction client uses the percentage of completion method for recognizing revenues. * Existence or occurrence assertion 9. A client has a defined benefit pension plan and does not have competent employees to write footnote disclosures. * Presentation and disclosure assertion – classifications and understandability 10. Slow-moving items included in inventory have been properly identified and priced. * Valuation or allocation assertion 11. A client financed the acquisition of assets using preferred stock that pays a 3 percent dividend and must be redeemed from the shareholders next year. * Rights and obligations assertion 6-22 | (Audit evidence) During the course of an audit, the auditor examines a wide variety of documentation. Listed below are some forms of documentary evidence and the sources from which they are