Chapter 13, Problem 8SC

3. In the audit of loans payable, which of the following audit procedure would be most likely performed to validate the existence assertion?  Group of answer choices  a. Review loan contracts  b. Sending loan confirmations  c. Vouching of subsequent payments of loans  d. Performing analytical procedures    4. You are auditing the December 31, 2021, accounts payable balance of one of your firm’s divisions. The division controller’s office has provided you with a schedule listing the creditors and the amount owed to each at December 31, 2021. Which of the following audit procedures would be your best choice for determining that no individual account payable has been omitted from the schedule?  Group of answer choices  a. Send confirmation requests to a randomly selected sample of creditors listed on the schedule  b. Examine support for selected 2022 payments to creditors, ascertaining that those relating to 2022 are not on the schedule.  c. Send confirmation requests to creditors that…

The following are various changes in audit circumstances. Audit Circumstance The client began experiencing an increase in returns due to product changes that resulted in increased defects. You found several pricing errors in your substantive tests of transactions for sales. In performing substantive tests of transactions for cash receipts, you found that receipts were promptly recorded in customer accounts, but there were delays in depositing the receipts at the bank. The client entered into a new loan agreement with the bank. Accounts receivable are pledged as collateral for the loan. The client did not reconcile the accounts receivable subsidiary records with the accounts receivable balance in the general ledger on a regular basis. Substantive analytical procedures indicated a significant slowing in accounts receivable turnover. The client entered into sales contracts with new customers that differ from the client’s standard sales contracts. The client had a significant increase in…

You are auditing Hawthorne Industries. The preliminary risk assessment resulted in a high potential for fraud given the number of offices it has across Canada and the high volume of travel-related expenses, as well as the weak controls around expense management. The travel expense account has been assigned to you for substantive testing and you would like to design an ADA to perform the testing. The data you have available include:• The general ledger• Corporate credit card data (in aggregate, as well as employee daily totals, location of charges, and vendor category, e.g., restaurant, fuel, hotel)• Payroll records that include start/end date, vacation and absenteeism data, and roleWhat are the main assertions related to the travel expense account? (Several choices may be correct.) Completeness Cut-off Classification Accuracy Occurrence Existence