Acct Stuff
CASE 5 – Evidence
1. For each of the following specific audit procedures, indicate the type of audit procedure it represents: (1) inspection of records or documents, (2) inspection of tangible assets, (3) observation, (4) inquiry, (5) confirmation, (6) recalculation, (7) reperformance, (8) analytical procedures, and (9) scanning. a. Sending a written request to the client’s customers requesting that they report the amount owed to the client. a. Confirmation i. Existence; trying to determine if A/R is overstated. b. Examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period. b. Inspection of document/records ii. Cutoff; make sure sales are recorded in proper period. c. Agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account. c. Reperformance-does total agree? iii. completeness d. Discussing the adequacy of the allowance for doubtful accounts with the credit manager. d. Inquiry iv. Valuation and allocation e. Comparing the current-year gross profit percentage with the gross profit percentage for the last four years. e. Analytical procedures v. Valuation and allocation f. Examining a new plastic extrusion machine to ensure that this major acquisition was received. f. Inspection of tangible assets vi. existence g. Watching the client’s warehouse personnel count the raw materials inventory. g. Observation vii. Existence/completeness h. Performing test counts of the warehouse personnel’s count of the raw material. h. Reperformance viii. Valuation and allocation i. Obtaining a letter from the client’s attorney indicating that there were no lawsuits in progress against the client. i. Confirmation ix. Existence/valuation and allocation j. Tracing
1. For each of the following specific audit procedures, indicate the type of audit procedure it represents: (1) inspection of records or documents, (2) inspection of tangible assets, (3) observation, (4) inquiry, (5) confirmation, (6) recalculation, (7) reperformance, (8) analytical procedures, and (9) scanning. a. Sending a written request to the client’s customers requesting that they report the amount owed to the client. a. Confirmation i. Existence; trying to determine if A/R is overstated. b. Examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period. b. Inspection of document/records ii. Cutoff; make sure sales are recorded in proper period. c. Agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account. c. Reperformance-does total agree? iii. completeness d. Discussing the adequacy of the allowance for doubtful accounts with the credit manager. d. Inquiry iv. Valuation and allocation e. Comparing the current-year gross profit percentage with the gross profit percentage for the last four years. e. Analytical procedures v. Valuation and allocation f. Examining a new plastic extrusion machine to ensure that this major acquisition was received. f. Inspection of tangible assets vi. existence g. Watching the client’s warehouse personnel count the raw materials inventory. g. Observation vii. Existence/completeness h. Performing test counts of the warehouse personnel’s count of the raw material. h. Reperformance viii. Valuation and allocation i. Obtaining a letter from the client’s attorney indicating that there were no lawsuits in progress against the client. i. Confirmation ix. Existence/valuation and allocation j. Tracing