auditors chapter 8 - I Ready carefully each statement...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
I. Ready carefully each statement and/or questions. Answer them as requested. 1. Auditors routinely conduct analytical procedures in the planning, testing, and completion phases of the audit. Identify the primary and secondary purposes of performing analytical procedures in each phase of the audit. Planning – The primary purposes are to understand the client’s business and industry and indicate areas of possible misstatements. The secondary purposes are to assess going concern and reduce the extent of detailed tests. Testing – The primary purpose is to reduce the extent of detailed tests, while the secondary purpose is to indicate areas of possible misstatements. Completion –The primary purpose is to indicate areas of possible misstatements, while the secondary purpose is to assess going concern. 2. Three types of legal documents and records that auditors examine in the planning phase of an audit are the corporate charter and bylaws, corporate minutes of meetings of the board of directors and stockholders, and contracts. Discuss the audit-relevant information contained in each of these three types of documents that an auditor should be aware of early in the audit. Corporate charter and bylaws- This includes the amounts of capital stock the corporation is authorized to issue, its par or stated value, preferences and conditions for dividends, and information concerning voting rights of each class of stock. The bylaws specify such things as the fiscal year of the corporation, the frequency of stockholder meetings, the method of voting for directors, and the duties and powers of the corporate officers. Minutes of meetings - There are two categories of audit-relevant information contained in the minutes: authorizations and discussions by the board of directors affecting inherent risk. Common authorizations in the minutes include compensation of officers, new contacts and agreements, acquisitions of property, loans, and dividend
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/19/2011 for the course ADEM 102 taught by Professor Cheo during the Winter '08 term at InterAmerican Bayamon.

Page1 / 5

auditors chapter 8 - I Ready carefully each statement...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online