B to support the auditors initial assessment of

b. To support the auditor’s initial assessment of control risk below
maximum, the auditor performs procedures to determine that internal
controls are operating effectively. Which of the following audit
procedures is the auditor performing?
(1) Tests of details of balances
( 2) Substantive tests of transactions
(3) Tests of controls
(4) Tests of trends and ratios
c. The primary objective of performing tests of controls is to obtain
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d. To test the effectiveness of controls, an auditor ordinarily selects
from a variety of techniques, including
DISCUSSION QUESTIONS AND PROBLEMS
13-24 (Objectives 13-1, 13-2) The following are 11 audit procedures
taken from an audit program:
1. Foot the accounts payable trial balance and compare the total
with the general ledger. test of details of balances
2. Confirm accounts payable balances directly with vendors. test of
details of balances
3. Account for a sequence of checks in the cash disbursements
journal to determine whether any have been omitted.
4. Examine vendors’ invoices to verify the ending balance in
accounts payable.
5. Compare the balance in payroll tax expense with previous years.
The comparison takes the increase in payroll tax rates into account.
6. Examine the internal auditor’s initials on monthly bank
reconciliations as an indication of whether they have been reviewed.
7. Examine vendors’ invoices and other documentation in support
of recorded transactions in the acquisitions journal.
8. Multiply the commission rate by total sales and compare the
result with commission expense.
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9. Examine vendors’ invoices and other supporting documents to
determine whether large amounts in the repair and maintenance
account should be capitalized.
10. Discuss the duties of the cash disbursements clerk with him and
observe whether he has responsibility for handling cash or preparing the
bank reconciliation.
11. Inquire about the accounts payable supervisor’s monthly review
of a computer-generated exception report of receiving reports and
purchase orders that have not been matched with a vendor invoice. test
of control
Required
a. Indicate whether each procedure is a test of control, substantive
test of transactions, analytical procedure, or a test of details of balances.
b. Identify the type of evidence for each procedure.
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