Shoe Zoo
Task 1
1. A roll forward is an important test in relation to year-end balance of gross PPE. It is necessary for the auditor to have assurance about the amount on the year-end 2011 balance sheet. However, a majority of the dollar amounts on the balance sheet should have been tested in the previous year. Roll forward allows the auditor to asses any activity since the last recording on the balance sheet. The mathematical accuracy is crucial because if the numbers are off, the auditor could be tested additions and/or disposals information that is not right. The beginning balance after the roll forward must equal the amount from the audited balance from the previous year, and these must also agree to the lead sheet. This is because these are the amounts that will be reported on the financial statements and must be correct.
2. For Step 7, we were asked to vouch asset additions from the invoices and checks we received. Inspecting these documents is more reliable than using copies that are usually created internally. This leads us to also use external documents rather than internal based off the greater independence received from them. In Step 8 we physically inspected the asset additions. When an auditor physically inspects an asset, it allows for reliability to be at its peak because we are going off of our own inspection not one obtained through someone working for the client. It allows for the existence assertion to be confirmed by the auditor. Putting your trust in a worker may be risky, however, the material that was provided and the worker in Florida’s confirmation were enough information for this case.
3. Although the error of $972.10 we found during the property additions testing was below the materiality threshold of $1,000, we need to further investigate to get reliance on how big of an impact this error could impose. After we pressured the client for information regarding the error, we discovered the cause was a property accountant being out for sick leave,
1. A roll forward is an important test in relation to year-end balance of gross PPE. It is necessary for the auditor to have assurance about the amount on the year-end 2011 balance sheet. However, a majority of the dollar amounts on the balance sheet should have been tested in the previous year. Roll forward allows the auditor to asses any activity since the last recording on the balance sheet. The mathematical accuracy is crucial because if the numbers are off, the auditor could be tested additions and/or disposals information that is not right. The beginning balance after the roll forward must equal the amount from the audited balance from the previous year, and these must also agree to the lead sheet. This is because these are the amounts that will be reported on the financial statements and must be correct.
2. For Step 7, we were asked to vouch asset additions from the invoices and checks we received. Inspecting these documents is more reliable than using copies that are usually created internally. This leads us to also use external documents rather than internal based off the greater independence received from them. In Step 8 we physically inspected the asset additions. When an auditor physically inspects an asset, it allows for reliability to be at its peak because we are going off of our own inspection not one obtained through someone working for the client. It allows for the existence assertion to be confirmed by the auditor. Putting your trust in a worker may be risky, however, the material that was provided and the worker in Florida’s confirmation were enough information for this case.
3. Although the error of $972.10 we found during the property additions testing was below the materiality threshold of $1,000, we need to further investigate to get reliance on how big of an impact this error could impose. After we pressured the client for information regarding the error, we discovered the cause was a property accountant being out for sick leave,