1 Examine consignment agreements 2 Examine check register for the month

1 examine consignment agreements 2 examine check

This preview shows page 9 - 12 out of 15 pages.

1.Examine consignment  agreements.2.Examine check register for the month  following  year end  for disbursementsrelating to the audit period.3.Select high dollar items from the perpetual inventory  records for
Background image
inspection/counting  during  the physical inventory.4.Select vendor  accounts  with  high activity during  the year, and  low balance atyear-end  for confirmation.5.Examine vehicle registration  forms to determine  the registered  owner.6.Review  bond  indenture  agreement  and  ascertain client compliance with  anyrestrictive covenants.7.Obtain the market value of short term securities as of the balance sheet date frompublished  records.8.Inspect major new  additions to plant  assets during  the current  period.9.Ascertain that the financial statements  comply with the industry  practice ofpresenting  a classified balance sheet.10.Test the aging of accounts receivable, discussing long-overdue  accounts with thecredit manager.11.Observe procedures, including  segregation  of duties, for approving  sales orders.12.Trace shipping  documents  to sales invoices.13.Reperform  check on accuracy of sales invoice pricing.14.Trace beginning  balance for accounts  payable to prior year’s working  papers.15.Inquire of accounting  and  purchasing  personnel about  unrecorded  payables.Answers  — Matching  11- 21.D6.E11.A2.B7.C12.B3.A8.A13.C4.B9.E14.C5.D10.C15.BShort  Answer  11- 1  (6 minutes)The nature  of substantive tests refers to the type and  effectiveness of the auditing  procedures  to  be performed.REQUIRED:  Identify and  discuss the three types of substantive procedures, addressing  the relative effectiveness and  cost of each.Answers  — Short  Answer  11- 1The three types of substantive procedures  are:  1.Analytical procedures  consist of the study  and  comparison  of relationships  among  data.  These procedures  have proven  quite effective in detecting large misstatements  in the  statements  and  tend  to be the least costly of substantive tests.  2.Tests of details of transactions primarily involve tracing and  vouching  the individual  
Background image
debit and  credit entries in the account.  When  these procedures  involve highly competent  evidence such as externally generated  documents, they can be quite effective.  They tend  to be more costly than  analytical procedures, but less costly than tests of details of balances.  3.Tests of details of balances verify the ending  account  balances directly, without  any  explicit reference to the individual  debit and  credit entries.  These procedures  tend  to be  
Background image
Image of page 12

You've reached the end of your free preview.

Want to read all 15 pages?

  • Fall '13
  • analytical procedures, Initialisms, detection  risk, substantive  tests

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes