Question 18 What procedures would an auditor use to verify the completeness

Question 18 what procedures would an auditor use to

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Question 18: What procedures would an auditor use to verify the completeness, rights and obligations, and valuation assertions for property, plant, and equipment? Answer: Completeness: -Obtain a lead schedule of property, plant, and equipment; foot schedule and agree totals to the general ledger. -Obtain detailed schedules for additions and dispositions of property, plant, and equipment; foot schedule; agree amounts to totals shown on lead schedule. -Physically examine a sample of capital assets and trace them into the property, plant, and equipment subsidiary ledger. -Trace from fixed assets to the property, plant and equipment subsidiary ledger- to determine that the assets are recorded. Rights & Obligations Verify the client's ownership of the assets- by examining titles to the fixed assets Valuation & Allocation -Reconcile the property, plant and equipment subsidiary ledger with the general ledger- to determine that the accounting for property, plant and equipment transactions was consistent -Recalculate the accounting for retirements of fixed assets -Review depreciation methods- for consistency with prior periods -Review useful lives- for appropriateness and consistency with prior periods -Recalculate depreciation computations
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Question 19: List THREE substantive analytical procedures that the auditor might use in auditing the income statement Answer: Comparing the current year’s dollar amount for each revenue and expense account (e.g., by product, business segment, or geographic region) with the prior years’ balances. Any account that deviates from the prior years’ trend by more than a predetermined amount should be investigated. An alternative to this type of substantive analytical procedure involves calculating the ratio of individual expense accounts to net sales and comparing these percentages across years Compare these percentages to industry averages. Individual expense accounts that are judged by the auditor to be out of line are investigated further. While these types of substantive analytical procedures are common, it is important that substantive analytical procedures designed to provide evidence regarding the fairness of revenue or other income statement accounts be conducted at a sufficiently disaggregated (i.e., monthly or weekly data versus annual data, by business segment or product) level to detect potential misstatements Provide evidence of specific revenue or expense accounts. For example, the auditor can evaluate the reasonableness of sales commissions by using the entity’s commission schedule and multiplying commission rates by eligible sales. This estimate can be compared to the recorded commission expense. Other examples might include overall reasonableness tests for interest and depreciation expense.
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Question 20: List the assertions about account balances and Identify any FOUR substantive procedures an auditor uses for auditing Cash account balances.
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