An auditor discovered the following matters while performing tests of controls 1.An invoice for goods received from Company for P10,000 was paid, but the client never ordered the goods. Required: a.What control would have prevented or detected each of the above misstatements? b.What test should the auditor perform to test the control? c.To which financial statement assertion does the misstatement relate?

An auditor discovered the following matters while performing tests of controls 1.An invoice for goods received from Company for P10,000 was paid, but the client never ordered the goods. Required: a.What control would have prevented or detected each of the above misstatements? b.What test should the auditor perform to test the control? c.To which financial statement assertion does the misstatement relate?

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter15: Audit Reports For Financial Statement Audits

Section: Chapter Questions

Problem 28CYBK

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An auditor discovered the following matters while performing tests of controls: 1.An obligation for insurance was not paid because the voucher that was prepared was never recorded. Required: a.What control would have prevented or detected each of the above misstatements? b.What test should the auditor perform to test the control? c.To which financial statement assertion does the misstatement relate?
which of the following regarding errors is not correct Select one: a. unintentional misstatement of the financial statements, b. mistake in recording the date of a sale invoice is error c. it is easier for the auditor to detect because it is not intentional d. Fraudulent Financial Reporting is kind of error
The financial records of the Movitz Company show that R. Dennis owes $4,100 on an account receivable. An independent audit is being carried out, and the auditors send a positive confirmation to R. Dennis. What is the most likely reason as to why a positive confirmation rather than a negative confirmation was used here?a. Control risk was particularly low for accounts receivable.b. Inherent risk was particularly high for accounts receivable.c. Dennis’s account was not yet due.d. Dennis’s account was not with a related party.
if the auditor want to assure that Receivables have not been sold. What assertion he or she want to test : Select one: a. Existence b. Completeness c. Rights and obligations d. Valuation and allocation
An auditor discovered the following errors and irregularities while performing tests of controls: 1. Goods received on October 3 were never placed in the storeroom but instead were taken to the receiving clerk’s home. Required:a. What control would have prevented or detected each of the aforementioned errors/irregularities?b. What tests should the auditor perform to test each control?c. To which financial statement assertion does the error or irregularity relate?
Which of the following is/are the least persuasive type of audit evidences? 1. Photocopies of sales invoices inspected by the auditor 2. Documents obtained by auditor from third parties directly 3. Bank statements obtained from the client 4. Computations made by the auditor. 1, 3 and 4 only 1 and 3 only 2 only 1 only Which one of the following indicates high degree of detection risk in respect to fl
Choose the one correct answer1. In auditing the client’s receivables, the auditor decided to select entries in the sales journal and trace them back to the sales invoice, delivery receipt and the sales order. This procedure is consistent in corroborating which of the following assertions? *A. PresentationB. CompletenessC. RightsD. ExistenceE. None of the above 2. The following are useful source of evidence with regard the reasonableness of the client’s accounting estimation policy regarding the collectability of accounts receivables, except: *A. Reviewing events happening after the balance sheet date but before the issuance of financial statements.B. Sending confirmation letters to customers to determine the customer’s ability to settle their accounts.C. Assessing the client’s historical experience in writing off uncollectible accounts in the prior years.D. Determining the consistency of the client’s policy with the industry practice.E. None of the above
The following questions concern types of audit tests.Choose the best response.a. The auditor looks for an indication on duplicate sales invoices to see whether theaccuracy of invoices has been verified. This is an example of(1) a test of details of balances. (3) a substantive test of transactions.(2) a test of control. (4) both a test of control and a substantivetest of transactions.
If the auditor concludes that there is a high likelihood of material misstatement in accounts receivable due to changing economic conditions, the auditor concludes that inherent risk for accounts receivab is low. Select one: OTrue O False e
Choose the one correct answer 6. In auditing the client’s receivables, the auditor decided to select entries in the sales journal and trace them back to the sales invoice, delivery receipt and the sales order. This procedure is consistent in corroborating which of the following assertion? * A. ValuationB. ExistenceC. CompletenessD. Rights and Obligationse. None of the above 9. Which of the following statements is valid relating to confirmation of accounts receivable? * a. A positive confirmation provides more reliable evidence than the negative confirmation because the auditor can perform follow-up procedures if no response is received from the debtorB. A negative form of confirmation is preferable to use when individual account balances of customers are relatively largec. In positive confirmation, failure to reply must be regarded as a correct response, even though the debtor may have ignored the confirmation requestd. An auditor must consider using the negative form of confirmation…
Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? A. Vouch a sample of cash disbursements recorded just after year end to receiving reports and vendor invoices. B. Compare a sample of purchase orders issued just after year-end with the year-end accounts payable balance. C. Scan the cash disbursement entries recorded just before year end for indications of unusual transactions. D. Vouch a sample of accounts payable entries recorded just before year end to the unmatched receiving report file.
An auditor discovered the following errors and irregularities while performing tests of controls: 1. Goods received on january 5 were never placed in the storeroom but instead were taken to the receiving clerk’s home. Required: a. What control would have prevented or detected each of the aforementioned errors/irregularities? b. What tests should the auditor perform to test each control? c. To which financial statement assertion does the error or irregularity relate?