Homework Assignment Week 3 - Homework Assignment Week 3 5-29 Audit Objective 1 2 3 4 5 6 7 8 9 10 11 Assertion Balance Audit Objective Valuation and

Homework Assignment Week 3 - Homework Assignment Week 3...

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Homework Assignment Week # 3 # 5-29 Audit Objective Assertion 1. Balance Audit Objective - Valuation and Allocation 2. Balance Audit Objective - Existence 3. Balance Audit Objective Completeness, Valuation & Allocation 4. Disclosure Audit Objective Classification & Understandability 5. Balance Audit Objective Rights and Obligations 6. Disclosure Audit Objectives Accuracy & Valuation 7. Balance Audit Objectives - Completeness 8. Balance Audit Objectives Rights and Obligations 9. Balance Audit Objectives - Valuation & allocation 10. Balance Audit Objectives - Valuation & Allocation 11. Disclosure Audit Objectives Classification & Understandability
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# 6 21 A. In the course of an audit, the auditor asks many questions of client officers and employees. Describe the factors that the auditor should consider in evaluating inquiry and oral evidence provided by client officers and employees. Discuss the validity and limitations of inquiry and oral evidence. Inquiry (oral evidence) is the weakest form of evidence and if given by the client should typically be followed up and verified by better evidence. Inquiry of outside parties (like the bank) can be more convincing. Evidence from inquiry should be based on how knowledgeable the parties are about the business and procedure. Often the client will tell you what they THINK is happening but they might not have verified it lately and may be relying on what someone else has told them. So, the best inquiry is from the person actually doing the activity, not someone who thinks it should be done. Inquiry has very low validity and is a good starting place to decide what to test and perhaps the areas for attention but is not persuasive. B. An audit may include computation of various balance sheet and operating ratios for comparison to prior years and industry averages. Discuss the validity and limitations of ratio analysis in an audit.
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  • Summer '14
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