Chapter 12 - Purchases, Payables, and Payments Process
60. This question requires knowledge about specific account balance assertions, general audit
procedures, and trade accounts payable.
You are assigned to audit trade accounts payable at Green Corporat
Chapter 03 - Reports on Audited Financial Statements and Audited Internal Control
37. Under which of the following circumstances would a disclaimer of opinion be
A. The client refuses to allow the auditor to review the minutes of the Board of
Chapter 09 - Control Assessment and Testing
27. A "walk through" test is:
A. A means of ensuring that transactions are processed as described in the control system
B. A test of physical security over access to computer rooms.
C. A computer assi
Chapter 11 - Revenues, Receivables, and Receipts Process
36. To determine whether sales transactions have been recorded in the proper accounting
period the auditor performs cut off tests. Which of the following best describes the overall
approach used whe
Chapter 12 - Purchases, Payables, and Payments Process
43. A good environmental control over purchases and payables would be to have:
A. The accounting department independent of the sales department.
B. The purchasing department independent of the receivi
Questions taken from: Principles of Audit & Other Assurance, Whittington, 19 th edition and Auditing An
International Approach, Smieliauskas, 6th edition
An assistant on the Carter Company audit has been working in the revenue cycle and has
identifier). This journal is a population of dash disbursement
transactions available for sample selection for detail test of controls
audit of supporting documents in the voucher for validity, authorization,
accuracy, classification, accounting, and prop
is providing independent competent valuation information, under auditors
SOLUTIONS FOR DISCUSSION CASES
Purchasing control procedures
Those internal control procedures Long would expect to find if Marylou's
system of internal
10. Perform overall test for accuracy
of inventory master file.
Manufacturing equipment and accumulated depreciation
Major objectives of the audit of Manufacturing Equipment, Manufacturing
Equipment-Accumulated Depreciation, and Repairs t
cases, auditors will audit the cost reports in connection with determining the
cost valuation of inventory and cost of goods sold.
Smieliauskas/Bewley / Auditing: An International Approach / 5e / Ch 13
The points of departure (assertions) in an a
Discovery Summary: If Collins is taking kickbacks in return for causing Bailey
to pay higher prices, the price comparison information should show
evidence. If this is the case, the other procedures should also bear
fruit-past employment history problems,
On the Road Inc. - Comprehensive audit engagement case
This is a comprehensive case that could be used for group work in class or as
a major assignment, or as a class discussion to pull together the big
picture and the details of planning a
Cost Accounting Test of Controls
[SEE FIGURE ON NEXT PAGE]
Sample of Cost Accounting Payroll
C-1a Reconcile periodic totals with
payroll register record of
Incomplete costing dev.
Vouch costs to ti
Materiality- pretax income $3,900,000 at 5% = $195,000
$26,000,000 at 1/2% = $130,000
Based on this, the above error of $190,000 would in my mind be considered material should have been
Overdue Accounts- In determining samples, no mention
SOLUTIONS FOR MULTIPLE-CHOICE QUESTIONS
MC 1 a.
MC 2 a.
MC 3 a.
Sampling risk exists in all sampling a
has an equal chance of being selected. Note, however, that a population unit depends on how a
population is defined. For example, an accounts receivable population can be viewed as a population of
accounts, each account potentially having different values
Failure to conduct audits properly, including (a) misinterpretation of
auditing standards, and (b) faulty implementation of auditing procedures.
Failure to detect management fraud, fraudulent financial reporting.
Actual involvement in fraud.
The PA should seek client permission to disclose information to anyone
(including a successor auditor). The banker should ask Candentoe to
permit the PA to speak to him, and refusal should itself raise questions
and cautions for the banker.
Report of Independent Auditors
To the Board of Directors and Stockholders
(Standard introduction paragraph goes here)
(Standard scope paragraph goes here)
As shown in the financial statements, the Company has current liabilities
ensuring and safeguarding the quality of services provided by CGAs;
maintaining ordered and dignified relationships among members in the
conduct of their profession.
The three mechanisms by which the CGA Code of Ethics and Rules of
possible when a large part of the operation involves fairly predictable high
volume transactions. Less hierarchical organizations tend to use more variable
and judgmental processes to achieve strategies that involve more unique, oneoff types of output.
meaningful relationships among components of financial and non-financial
information to form expectations about what amounts recorded in the accounts
should be; comparing such expectations with the recorded amounts to identify
inconsistencies ; and using
Non-key controls are other controls that are either related to risks
that are not significant, or that the auditor plans to address by testing the
related balances substantively. An example is the use of variance reports and
The needs for supervision and review of work performed by
Evidence which should be included in audit working papers to support a
PA's compliance with generally accepted auditing standards includes:
contains internal control weaknesses that create risks of material financial
Dual purpose tests can lower the cost of obtaining audit evidence because they
provide both compliance and substantive evidence from the same audit
EXHIBIT EP9.6-1 Blank form for Students
Sales recorded, goods not shipped
Goods shipped, sales not recorded
Goods shipped to a bad credit risk customer
Sales billed at the wrong price or wrong quantity
Product line A sales recorded as Produ
Ownership (Rights): Vouch the legal title papers and recorded deed for
evidence of ownership.
Valuation: Vouch the contractor's billings and the payments for evidence
of appropriate cost valuation.
Presentation and Disclosure: Study any related loan agree
relationships. The concept is that financial statements should contain numbers
and descriptions reflecting the real relationships in transactions and
relationships, not the narrowly defined legal relationships that may be
contrived in contracts designed