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For each audit procedure, identify whether it is a test of control or a substantive test of transactions.
For each test of control or substantive test of transactions procedure, identify the transaction-related audit objective or objectives being satisfied.
For each control, list one substantive test the auditor could perform to determine whether financial misstatements are actually taking place.
Prenumbered receiving reports are prepared as support for acquisitions and numerically accounted for.
The computer initiates an order only when perpetual inventory levels fall below prespecified inventory levels in the inventory master file.
Recommend an evidence mix for the five types of tests for the audit of inventory and cost of goods sold. Justify your answer.
Extensive reliance on controls was planned for this audit engagement, but control risk was increased after tests of controls.
Perform tests of controls and substantive tests of transactions for the acquisition and payment and payroll and personnel cycles.
What things should have been apparent to Brewer in the conduct of the audit?
List the most important duties that should be segregated in the sales and collection cycle. Explain why it is desirable that each duty be segregated.
Explain the importance of proper credit approval for sales. What effect do adequate controls in the credit function have on the auditor's evidence accumulation?
List the transaction-related audit objectives for the audit of sales transactions.
Explain how prenumbered shipping documents and sales invoices can be useful controls for preventing misstatements in sales.
What is the difference between the auditor's approach in verifying sales returns and allowances and that for sales?
Explain why auditors usually emphasize the detection of fraud in the audit of cash receipts.
Explain what is meant by a proof of cash receipts and state its purpose.
State the relationship between the confirmation of accounts receivable and the results of the tests of controls and substantive tests of transactions.
For each of the preceding questions, state the transaction-related audit objectives being fulfilled if the control is in effect.
Identify the type of evidence used for each audit procedure, such as inspection and observation.
To determine whether the internal controls operated effectively to minimize instances of failure to invoice a shipment, the auditor would select a sample .
Identify whether each audit procedure is a test of control or substantive test of transactions.
Remittance advices are separated from the checks in the mailroom and forwarded to the accounting department.
Identify the deficiencies and recommend improvements in procedures for collection made at weekly services and record keeping for members' pledges.
Sales returns are presented to a sales department clerk who prepares a written, prenumbered receiving report.
For each control, identify the transaction-related audit objective(s) being fulfilled if each control is in effect.