Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
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Chapter 18, Problem 25DQP
a.
To determine
List the type of test involved in each procedure
b.
To determine
List the transaction related objective being met for substantive test and test of control
c.
To determine
List the balance related audit objectives are being met for substantive analytical procedure and test of detail of balance
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The following audit procedures are included in the audit programfor the audit of the financial statements of Golden State Overnight Express:1. Select a sample of acquisitions from the acquisitions journal and perform the following:a. Vouch the transaction to the voucher package that includes the matched receivingreport, purchase order, and vendor invoice.b. Verify that the purchase order was approved by an authorized purchasing agent.c. Verify that the initials of accounts payable clerk are present, indicating that thedocuments have been appropriately matched and that amounts on the vendorinvoice were verified.d. Recalculate the invoice amount and compare the dollar amounts per the invoiceto the amount recorded in the acquisitions journal.e. Examine whether the transaction was recorded to the correct vendor in theaccounts payable master file.f. Determine if the transaction was recorded in the correct month, based on whenthe goods were received and the terms of the transaction.g. Review…
The following internal controls for the acquisition and payment cycle were selected from a standard internal control questionnaire.1. Approved purchase orders are required for all acquisitions of goods.2. Prenumbered receiving reports are prepared as support for acquisitions and numeri-cally accounted for.3. Dates on receiving reports are compared with vendors’ invoices before entry into theacquisitions journal.4. Account classifications are reviewed by someone other than the preparer.5. All supporting documents are cancelled after checks are signed or electronic fundstransfers are approved.6. The authorized signer compares data on supporting documents with checks and elec-tronic funds transfer authorizations.7. Vendors’ invoices are recalculated before payment.8. All checks are signed by the owner or manager.9. Checks are mailed by the owner or manager or a person under her supervision aftersigning.
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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, 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.
Chapter 18 Solutions
Auditing And Assurance Services
Ch. 18 - List five asset accounts, three liability...Ch. 18 - Prob. 2DQPCh. 18 - Prob. 3DQPCh. 18 - Prob. 4DQPCh. 18 - Prob. 5DQPCh. 18 - Prob. 6DQPCh. 18 - Prob. 7DQPCh. 18 - Prob. 8DQPCh. 18 - Prob. 9DQPCh. 18 - Prob. 10DQP
Ch. 18 - Prob. 11DQPCh. 18 - Prob. 13DQPCh. 18 - Prob. 14DQPCh. 18 - Prob. 15DQPCh. 18 - Prob. 16.1MCQCh. 18 - Prob. 16.2MCQCh. 18 - Prob. 16.3MCQCh. 18 - Prob. 17.1MCQCh. 18 - Prob. 17.2MCQCh. 18 - Prob. 17.3MCQCh. 18 - Prob. 18.1MCQCh. 18 - Prob. 18.2MCQCh. 18 - Prob. 18.3MCQCh. 18 - Prob. 19DQPCh. 18 - Prob. 20DQPCh. 18 - Prob. 21DQPCh. 18 - Prob. 22DQPCh. 18 - The following misstatements are included in the...Ch. 18 - Prob. 24DQPCh. 18 - Prob. 25DQPCh. 18 - Prob. 26DQPCh. 18 - Prob. 27DQPCh. 18 - Prob. 28DQPCh. 18 - Prob. 30C
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- The following are parts of a typical audit for a company with a fiscal year end of July 31. Set acceptable audit risk and decide preliminary judgment about materiality and performance materiality. Understand internal control and assess control risk. Perform substantive analytical procedures for accounts payable. Confirm accounts payable. Perform tests of controls and substantive tests of transactions for the acquisition and payment and payroll and personnel cycles. Perform other tests of details of balances for accounts payable. Perform tests for review of subsequent events. Accept the client. Issue the audit report. Required Identify the phase of the audit in which each activity occurs. Put parts 1 through 9 of the audit in the sequential order in which you would expect them to be performed in a typical audit. Identify those parts that will frequently be done before July 31.arrow_forwardof stion For a sample of sales transactions selected from the sales journal, verify that the amount of the transaction has been recorded in the correct customer account in the accounts receivable subledger. Choose the Audit Objective: Choose the specific audit objective →arrow_forwardThe following are audit procedures in the sales and collectioncycle:1. Add the columns on the aged trial balance and compare the total with the generalledger.2. Examine a sample of shipping documents to determine whether each has a salesinvoice number included on it.3. Examine a sample of customer orders and see if each has a credit authorization.4. Compare the date on a sample of shipping documents a few days before and afterthe balance sheet date with related sales journal transactions.5. Discuss with the sales manager whether any sales allowances have been grantedafter the balance sheet date that may apply to the current period.6. Observe whether the controller makes an independent comparison of the total inthe general ledger with the trial balance of accounts receivable.7. Compare the date on a sample of shipping documents throughout the year withrelated duplicate sales invoices and the accounts receivable master file.8. Compute the ratio of allowance for uncollectible accounts…arrow_forward
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