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L10 Notes_Part_10 - Review the AR with the credit manager...

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Review the AR with the credit manager to evaluate their collectibility - inquiry Count inventory items and record the amount in the audit files - PE Obtain a letter from the client’s attorney addressed to the CPA firm stating that the attorney is not aware of any existing lawsuits. - Inquiry Extend the cost of inventory times the quantity on an inventory listing to test whether it is accurate - reperformance Obtain a letter from an insurance company to the CPA firm stating the amount of the fire insurance coverage on buildings and equipment - Confirmation Examine an insurance policy stating the amount of the fire insurance coverage on buildings and equipment - Documentation Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross magin relative to the preceding year. - ARP Obtain information about internal control by requesting the client to fill out a questionnaire - Inquiry Trace the total on the cash disbursements journal to the general ledger - reperformance
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1. Examine vendors’ invoices to verify the ending balance in accounts payable.
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