Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Question
Chapter 16, Problem 39ICA
a.
To determine
List the relationship, ratio, and trend for reasonableness of accounts payable.
b.
To determine
Explain the test of details of balances audit program for accounts payable.
c.
To determine
Explain the effects of test of details of balances in
d.
To determine
Develop the audit schedule to determine the misstatements for each difference.
e.
To determine
Calculate the estimated misstatement in income statement.
f.
To determine
Estimate the total misstatements in accounts payable.
g.
To determine
Provide conclusion about the fairness of the recorded balance in accounts payable, and its effect.
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Students have asked these similar questions
Cite one one transaction-related audit objective for each of the following transactions:
1. acquisitions
2. cash disbursements
For each objective, identify
a. one key internal control activity, and
b. one audit procedure to test the control
You 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.
attachments
1. Which of the following is an example of an input control in the expenditure cycle?
a. Physical controls over inventory
b. Reconciling the bank statement
c. Document sequencing
d. Access controls over the purchasing system
2. A control procedure that helps prevent duplicate payments is:
a. Performing physical inventory counts
b. Matching purchase orders, receiving reports, and vendor invoices
c. Reconciling bank statements
d. Conducting vendor audits
3.Which of the following is an example of an independent verification control in the expenditure cycle?
a. Document sequencing
b. Reconciling the bank statement
c. Segregation of duties
d. Physical controls over inventory
Chapter 16 Solutions
Auditing And Assurance Services
Ch. 16 - Prob. 1RQCh. 16 - Prob. 2RQCh. 16 - Prob. 3RQCh. 16 - Prob. 4RQCh. 16 - Explain why you agree or disagree with the...Ch. 16 - Prob. 6RQCh. 16 - Prob. 7RQCh. 16 - Prob. 8RQCh. 16 - Prob. 9RQCh. 16 - Prob. 10RQ
Ch. 16 - Prob. 11RQCh. 16 - Under what circumstances is it acceptable to...Ch. 16 - Prob. 13RQCh. 16 - Prob. 14RQCh. 16 - Prob. 15RQCh. 16 - Prob. 16RQCh. 16 - Prob. 17RQCh. 16 - Prob. 18RQCh. 16 - Prob. 19RQCh. 16 - Prob. 20.1MCQCh. 16 - Prob. 20.2MCQCh. 16 - Prob. 20.3MCQCh. 16 - The following questions deal with confirmation of...Ch. 16 - Prob. 21.2MCQCh. 16 - Prob. 21.3MCQCh. 16 - Prob. 22.1MCQCh. 16 - Prob. 22.2MCQCh. 16 - Prob. 22.3MCQCh. 16 - Prob. 23.1MCQCh. 16 - Which of the following is least likely to be a...Ch. 16 - The following questions concern auditor...Ch. 16 - Prob. 24DQPCh. 16 - Prob. 25DQPCh. 16 - Prob. 26DQPCh. 16 - The following misstatements are sometimes found in...Ch. 16 - Prob. 28DQPCh. 16 - Prob. 29DQPCh. 16 - Prob. 30DQPCh. 16 - Prob. 31DQPCh. 16 - Prob. 32DQPCh. 16 - Prob. 33DQPCh. 16 - Prob. 34DQPCh. 16 - Prob. 35DQPCh. 16 - Prob. 36DQPCh. 16 - Prob. 38DQPCh. 16 - Prob. 39ICA
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Similar questions
- 22) 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_forward1. The primary objective of internal controls in the expenditure cycle is to: A. Ensure the accuracy and completeness of financial transactions B. Streamline the procurement process C. Minimize the cost of purchases D. Increase the speed of payment processing 2. An example of a preventive control in the expenditure cycle is: A.Requiring management approval for large purchases B. Regular inventory counts C. Using firewalls and intrusion detection systems D. Conducting vendor audits 3. Which of the following is an example of a processing control in the expenditure cycle? A. Document sequencing B. Reconciling the bank statement C. Physical controls over inventory D. Approval of vendor invoices 4. Purchase orders are used to initiate a payment in the disbursement cycle.True False 5. An automated approval workflow for payment processing eliminates the need for managerial oversight and authorization. True or Falsearrow_forwardExplain the relationship between the methodology for designing tests of controls and substantive tests of transactions in Figure 13-5 (p. 429) and the methodology for designing tests of details of balances in Figure 13-7 (p. 431).arrow_forward
- GIven the situation that you are an auditor of GZ Company and you were asked to provide the following(s): a. Explain the audit objectives for the management assertion of Bank, Cash, Inventories, Revenue and Payment. b. Explain 5 Audit procedures used in the process of acquiring evidence to test the management assertion for Bank, Cash, Inventories, Revenue and Payment.arrow_forwardYou have been assigned to review the payment system of an enterprise. The finance director suspects that some duplicate payments may have been made. List five control procedures which you would expect to find.arrow_forwardAn audit strategy sets the direction, timing, and scope of an audit. Based on your audit knowledge, which of the following would be included in the audit strategy document? Select one:a. A flowchart of the entity's internal control system.b. The decision as to the combination of substantive testing and tests of control that would be adopted.c. The number of sales transactions to be tested.d. The results of the interim testing of payroll.arrow_forward
- 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.arrow_forwardAssume that your audit partner asks you to design detailed substantive testing programs for accounts receivable and sales of Air New Zealand. Your partner also asks you to incorporate specific analytical procedures and tests of detail (i.e. direct tests on balances and tests of transactions of a balance).Required:Design/develop a substantive audit tests program and explain & justify your audit program in terms of audit objectives (also called ‘audit assertions’)Questiona. Trade and Other Receivables and Operating Revenue: You have assessed the inherentrisk of management distortion, and overstatement of Revenues, to be high this yearbecause senior management is trying to obtain an extended loan from their financialinstitution. However, the only weakness revealed in the testing of controls is a lack ofreview of adjusting journal entriesarrow_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_forward
- You are working on the audit of Frozen Fresh Ltd and have just completed an evaluation of controls in the sales receivable, and receipt area. You note the following key controls as part of your evaluation a all sales handled were supported by shipping documents. b. All sales once shipped have been invoiced and recorded in the accounting records. C) invoices have been recorded correctly. Required: For each of the controls (a to c) 1. Identity the assertion addressed by the control 2. Provide one common control policies and procedures in the organisation to address the assertions 3. Provide one procedure that could be used to test the control for the key control identifiedarrow_forwardList the transaction-related audit objectives for the verificationof cash receipts. For each objective, state one internal control that the client can use toreduce the likelihood of misstatements.arrow_forwardWhich of the following provides the highest-quality evidence regarding the Valuation of recorded accounts payable? Question 5 options: Inspecting invoices for all cash disbursements during the year. Performing analytical procedures. Confirming balances with creditors and suppliers. Recalculating the balance of accounts payable.arrow_forward
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