But rememberaccount balances are made up of

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Unformatted text preview: alances. We have just identified three stages in the accounting process that take place in the preparation of financial statements: internal controls are implemented to ensure appropriate capturing and recording of individual transactions, which are then collected into ending account balances. This summary might seem like an oversimplification, but it will help you understand the stages of a client’s accounting process on which auditors focus to collect evidence. Keep in mind that the auditor’s job ultimately is to express an opinion on whether the financial statements are fairly stated. It makes sense, then, that the auditor can design procedures to collect direct information about the ending account balances that make up the financial statements. For example, an auditor might confirm the ending balance of the cash account by contacting the client’s bank, or the auditor might verify the ending balance of the inventory account by physically examining individual inventory items that make up the ending balance. But remember—account balances are made up of individua...
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