Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 14, Problem 26DQP
a.
To determine
List for each of the
b.
To determine
Identify the transaction related audit objectives out of the 7 transactions.
c.
To determine
State the type of evidence used for each audit procedure.
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The following are commonly performed tests of controls and substantive tests of transactions audit procedures in the sales and collection cycle:
Review the prelisting of cash receipts to determine whether cash is prelisted daily.
Reconcile the recorded cash receipts on the prelisting with the cash receipts journal and the bank statement for a one-month period.
Account for a sequence of shipping documents and examine each one to make sure that a related sales invoice exists.
Account for a sequence of sales invoices and examine each one to make sure that a related shipping document exists.
Compare the quantity and description of items on shipping documents with the related sales invoices.
Trace recorded sales in the sales journal to the related accounts receivable master file and compare the customer name, date, and amount for each one.
Examine sales returns for approval by an authorized official.
Required
Identify whether each audit procedure is a test of control or a…
Which of the following audit procedures is aimed most directly at testing the completeness assertion for accounts payable?
Footing the list of accounts payable.
Tracing shipping reports after year-end to related customer purchase orders and invoices.
Examining underlying documentation for cash disbursements in the period after year-end.
Tracing shipping reports issued on or before year-end to related customer purchase orders and invoices.
Cash receipts should be deposited on the day of receipt or the following business day. Select the most appropriate audit procedure to determine that cash is promptly deposited.
a. Review the functions of cash receiving and disbursing for proper separation of duties.
b. Review cash register tapes prepared for each sale.
c. Review the functions of cash handling and maintaining accounting records for proper segregation of duties.
d. Compare the daily cash receipts totals with the bank deposits
Chapter 14 Solutions
Auditing And Assurance Services
Ch. 14 - Describe the following documents and records and...Ch. 14 - Prob. 2RQCh. 14 - Prob. 3RQCh. 14 - Prob. 4RQCh. 14 - Prob. 5RQCh. 14 - Prob. 6RQCh. 14 - Prob. 7RQCh. 14 - Prob. 8RQCh. 14 - Prob. 9RQCh. 14 - Prob. 10RQ
Ch. 14 - Prob. 11RQCh. 14 - Prob. 12RQCh. 14 - Prob. 13RQCh. 14 - Prob. 14RQCh. 14 - Prob. 15RQCh. 14 - Prob. 16RQCh. 14 - Prob. 17RQCh. 14 - Prob. 18RQCh. 14 - Prob. 19RQCh. 14 - Prob. 20.1MCQCh. 14 - Prob. 20.2MCQCh. 14 - Prob. 20.3MCQCh. 14 - Prob. 21.1MCQCh. 14 - An auditor is performing substantive tests of...Ch. 14 - Prob. 22.3MCQCh. 14 - Prob. 23.1MCQCh. 14 - Prob. 23.2MCQCh. 14 - Prob. 23.3MCQCh. 14 - Prob. 24DQPCh. 14 - Prob. 25DQPCh. 14 - Prob. 26DQPCh. 14 - Prob. 27DQPCh. 14 - Prob. 28DQPCh. 14 - Prob. 29DQPCh. 14 - Prob. 30DQPCh. 14 - Prob. 31DQPCh. 14 - Prob. 32DQPCh. 14 - Prob. 33DQPCh. 14 - Prob. 34DQPCh. 14 - Prob. 37ICA
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- Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? *A. Scan the cash disbursements entries recorded just before year end for indications of unusual transactions.B. Compare a sample of purchase orders issued just after year end with the year-end accounts payable trial balance.C. Obtain a copy of the receiving report until year end and its related sales invoice and trace them to the purchases journal.D. Compare the entries recorded in the purchases journal and the cash disbursements journal just before year end.arrow_forwardWhen auditing the cash account, the auditor traces the cash receipts, which are recorded on the cash receipt journal but not on the current period bank statement, to subsequent bank statements. Which of the following audit objectives are tested? A. Classification and cut-off B. Completeness and occurrence C. Occurrence and cut-off D. Completeness and cut-off E. Classification and occurrencearrow_forwardThe following are commonly performed tests of controls and substantive tests of transactions audit procedures in the sales and collection cycle, acquisition and payment cycle, and inventory and warehousing cycle: Account for a sequence of shipping documents and examine each one to make sure that a duplicate sales invoice is attached. Compare the quantity and description of items on shipping documents with the related duplicate sales invoices. Trace a sample of voucher packages to the acquisitions journal throughout the year to determine that the transaction is included in the acquisitions journal. Determine if the transaction was recorded in the correct month, based on when the goods were received and the terms of the transaction. Required: Identify for each test the related cycle. Identify whether each audit procedure is a test of control or a substantive test of transactions. State which of the six transaction-related audit objectives each of the audit procedures fulfills.arrow_forward
- The CPAs test of detail transactions included the following auditing procedures which were undertaken for a selected test-month: CASH RECEIPTS: Reconciled credits per bank statement with receipts per book. Traced deposits to remittance advices. Traced totals to the general ledger. Footed the cash book. CASH DISBURSEMENTS: E. Compared cancelled checks with check register for name, signature, payee and endorsement. F. Footed check register G. Traced totals to the general ledger. H. Examined invoices, cash vouchers and other documents supporting disbursements (other than payroll disbursements) I. Reconciled recorded disbursements with charges per bank statement. Directions: Below are presented some of the more common methods of concealing shortages. For each of these items, indicate the letter of the auditing procedure listed above which most likely to uncover the shortage. If the answer is "NONE", so state on the space provided. No. Items ANSWER 1. Check included in petty cash…arrow_forwardIn testing controls over cash disbursements, an auditor most likely would determine that the person who signs checks also a. Returns the checks to accounts payable.b. Records the payment in the cash disbursements journalc. Stamped "paid" the supporting documents.d. Updates the accounts payable subsidiary ledger.arrow_forward22) Use audit software to foot and cross foot the cash disbursements journal and trace the balance to the general ledger. This is which of the following tests A) test of balances B) analytical procedure C) test of transactions D) test of controlarrow_forward
- 22) Use audit software to foot and crossfoot the cash disbursements journal and trace the balance to the general ledger. This is which of the following tests A) test of balances B) analytical procedure C) test of transactions D) test of controlarrow_forwardWhen a sample of customer accounts receivable is selected for vouching debits, auditors will vouch them toa. Sales invoices with shipping documents and customer sales invoices.b. Records of accounts receivable write-offs.c. Cash remittance lists and bank deposit slips.d. Credit files and reports.arrow_forwardAuditors are auditing the cash receipts for Great Wall Corporation. For each audit procedure performed (numbered 1 - 5 below) select the control objective being tested by placing the correct letter in the blank. A. ExistenceB. CompletenessC. AuthorizationD. AccuracyE. ClassificationF. Accounting and postingG. Proper period_______ 1. For a sample of recorded cash receipts, the auditors compared the date of receipt to the recording date._______ 2. The auditors traced a sample of daily cash reports to the cash receipts journal._______ 3. The auditors vouched a sample of recorded cash receipts to the deposits in the bank statement._______ 4. The auditors recalculate the cash listed on the daily deposit for a sample of recorded cash receipts._______ 5. The auditors traced a sample of recorded cash receipts to postings in the correct customers' accounts.arrow_forward
- Determine whether each of the following procedures is a test of control or a substantive test. a) The auditor inspects a sample of sales orders to determine if the sales manager has approved the orders. b) The auditor sends a confirmation to the bank to verify the cash balance on hand. c) The auditor attends the inventory count and observes client personnel as they conduct the count. d) The auditor recalculates the amount of interest payable. e) Stand by the payroll time clock to determine whether any employee "punches in" more than one time.arrow_forwarda. Indicate whether each procedure, given below, is a test of control, substantive test of transactions, substantive analytical procedure, or a test of details of balances. b. Identify the type of evidence for each procedure. The following are 11 audit procedures taken from an audit program: 1. Discuss the duties of the cash disbursements clerk with him and observe whether he has responsibility for handling cash or preparing the bank reconciliation. 2. Examine vendors’ invoices and other supporting documents to determine whether large amounts in the repair and maintenance account should be capitalized. 3. 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. 4. Foot the accounts payable trial balance and compare the total with the general ledger. 5. Confirm accounts payable balances directly with vendors. 6. Account for a sequence of checks in the…arrow_forwardYou are part of the audit team that is auditing Hillsburg Hardware Co. and you have been assigned to the sales and collection business process. You are testing whether the cash received has been recorded in the cash receipts journal. (completeness objective/assertion). List two tests of controls and at least one test of transactions that you would do to satisfy yourself regarding the completeness assertion. attachmentsarrow_forward
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