A9 Twatt - Chapter 9 Tiffany Watt Assignment A9 AC 405 –...

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Unformatted text preview: Chapter 9 Tiffany Watt Assignment: A9 November 18, 2011 AC 405 – E01 9-22. How does the auditor’s approach and emphasis in auditing assets differ from auditing liabilities? Compare and contrast the objectives in the audit of current assets to those in the audit of current liabilities. The auditor’s approach and emphasis in auditing assets differs from auditing liabilities because liabilities, unlike assets, are more likely to be understated. Assets, on the other hand, are more likely to be overstated. Physical examination of the assets and inspection of underlying documents are the main sources of substantive audit evidence. Assets, such as long-term productive assets, are tested for existence and rights. Whereas, liabilities such as current payables are tested for completeness. 9-28. (a) What are the objectives in the audit of the inventory account? The objectives in the audit of the inventory account are to verify management’s assertions that pertain to the inventory account. These assertions include existence, rights, completeness, valuation, and presentation. (b) How will you advise your senior to use analytical procedures? I would advise my senior to use ratios when performing analytical procedures. He or she should be alert to discrepancies that arise as a result of changes in the way inventory has previously been recorded, such as changing from LIFO to FIFO. (c) How will you advice your senior concerning responsibilities for an effective observation of the client’s physical inventory count?...
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A9 Twatt - Chapter 9 Tiffany Watt Assignment A9 AC 405 –...

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