a.
Concept introduction:
To indicate: Type of audit procedure insending a written request to the client's customers requesting that they report the amount owed to the client represents.
a.
Answer to Problem 5.32P
Confirmation.
Explanation of Solution
Type of audit procedure in Sending a written request to the client's customers requesting that they report the amount owed to the client represents is confirmation. Confirmation can be internal confirmation and external confirmation. An external confirmation represents audit evidence obtained by auditor as a direct response from a third party.
b.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of auditprocedure in examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period represents.
b.
Answer to Problem 5.32P
Inspection of records or documents.
Explanation of Solution
Type of audit Examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period represents is Inspection of records or documents. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
c.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account represents.
c.
Answer to Problem 5.32P
Inspection of records or documents and reperformance.
Explanation of Solution
Type of audit procedures in agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account represents is inspection of records or documents and representation. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
d.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in discussing the adequacy of the allowance for doubtful accounts with the credit manager represents.
d.
Answer to Problem 5.32P
Inquiry.
Explanation of Solution
Type of audit procedures in discussing the adequacy of the allowance for doubtful accounts with the credit manager represents is Inquiry. Inquiry consist of seeking information of knowledgeable person within the entity or outside of the entity. Inquiry is used throughout the audit in addition to other audit procedure.
e.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in comparing the current-year gross profit percentage with the gross profit percentage for the last four yearsrepresents.
e.
Answer to Problem 5.32P
Analytical procedure.
Explanation of Solution
Type of audit procedures in comparing the current-year gross profit percentage with the gross profit percentage for the last four years represents is Analytical procedures. Analytical procedures consist of evaluation of financial information made by a study or financial and non-financial data.
f.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in examining a new plastic extrusion machine to ensure that this major acquisition was received represents.
f.
Answer to Problem 5.32P
Inspection of tangible asset.
Explanation of Solution
Type of audit procedures in examining a new plastic extrusion machine to ensure that this major acquisition was received represents is Inspection of tangible data. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
g.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in watching the client's warehouse personnel count the raw materials inventory represents.
g.
Answer to Problem 5.32P
Observation.
Explanation of Solution
Type of audit procedures in watching the client's warehouse personnel count the raw materials inventory represents is observation. Observation consists of looking at a process or procedure performed by others.
h.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in performing test counts of the warehouse personnel's count of the raw materialrepresents.
h.
Answer to Problem 5.32P
Reperforming.
Explanation of Solution
Type of audit procedures in performing test counts of the warehouse personnel's count of the raw material represents is Reperforming. Reperforming involves the auditor’s independent execution of procedures or controls that were originally performed as part of the entity’s internal control.
i.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in obtaining a letter from the client's attorney indicating that there were no lawsuits in progress against the clientrepresents.
i.
Answer to Problem 5.32P
Confirmation.
Explanation of Solution
Type of audit procedures in obtaining a letter from the client's attorney indicating that there were no lawsuits in progress against the client represents is confirmation. Confirmation can be internal confirmation and external confirmation. An external confirmation represents audit evidence obtained by auditor as a direct response from a third party.
j.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in tracing the prices used by the client's billing program for pricing sales invoices to the client's approved price listrepresents.
j.
Answer to Problem 5.32P
Inspection of records or documents and reperforming.
Explanation of Solution
Type of audit procedures in tracing the prices used by the client's billing program for pricing sales invoices to the client's approved price list represents is inspection of records or documents and representation. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
k.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures reviewing the general ledger for unusual
k.
Answer to Problem 5.32P
Scanning.
Explanation of Solution
Type of audit procedures reviewing the general ledger for unusual adjusting entries represents is scanning. Scanning is checking the data’s again for mistakes.
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Chapter 5 Solutions
EBK AUDITING & ASSURANCE SERVICES: A SY
- Which of the following auditing procedures probably would provide the most reliable evidence concerning the entity’s assertion of rights and obligations related to inventories?a. Trace test counts noted during the entity’s physical count to the entity’s summarization of quantities.b. Inspect agreements to determine whether any inventory is pledged as collateral or subject to any liens. c. Select the last few shipping documents used before the physical count and determine whether the shipments were recorded as sales.d. Inspect the open purchase order file for significant commitments that should be considered for disclosure.arrow_forwardList the functions needs to be done on the part of auditor to verify contingent liabilities of an company during the process of the audit?arrow_forwarddiscuss the process of auditing the followingtransactions/accounts: • Revenue Recognition• Property and Equipment• Leasesesarrow_forward
- The following are two specific audit objectives in the audit of accounts payable. The list referred to is the list of accounts payable taken from the accounts payable subsidiary record. The total amount in the list agrees with the accounts payable balance in the general ledger. For the audit of accounts payable, which of these two specific audit objectives is usually more important? Group of answer choices a. Audit of existence. b. Audit of completeness.arrow_forwardthe auditor confirms the receivable of the entity to the entity's customers: a. existence b. completeness c. cutoff d. valutationarrow_forwardA. Inspections of tangible assetsB. ConfirmationC. TracingD. VouchingE. InquiryF. External-internal evidenceG. Audit planH. Substantive procedures___ 1. Documentation prepared by independent parties and sent to the client.___ 2. Proceeding forward through the accounting and control system from the evidence to the financial statements.___ 3. Audit of details of transactions and balances.___ 4. Audit procedure that provides compelling evidence of existence.___ 5. Direct correspondence with independent parties.___ 6. A list of audit procedures.arrow_forward
- A system that traces the detailed transactions relating to any item in an accounting record could be define as an audit trail. Therefore, Tracing is used primarily to test which of the following assertions about classes of transactions? Select one: a. Valuation and Allocation. b. Accuracy. c. Existence. d. Completenessarrow_forwardAnalytical procedures are generally used to produce evidence froma. Confirmations mailed directly to the auditors by client customers.b. Physical observation of inventories.c. Relationships among current financial balances and prior balances, forecasts, and nonfinancial data.d. Detailed examination of external, external-internal, and internal documents.arrow_forwardAudit tests include tests of controls and substantive procedures. Substantive procedures can be divided into substantive analytical procedures, tests of balances, tests of transactions and tests of disclosures.Required:For each test in the table below, select the type of audit test it represents. 1.Examine the financial report to determine whether all related party loans are properly presented2.Recalculate depreciation figure3.Trace sales recorded in the sales journal to shipping documents4.Examine sales invoices for initials to indicate that prices and extensions have been checked5.Check the cost of closing inventory to subsequent sales prices6.Confirm loan balances with financial institutionsarrow_forward
- For each of the descriptions 1-6, match the correct word or phrase from A-H.A. Inspections of tangible assetsB. ConfirmationC. TracingD. VouchingE. InquiryF. External-internal evidenceG. Audit planH. Substantive procedures___ 1. Documentation prepared by independent parties and sent to the client.___ 2. Proceeding forward through the accounting and control system from the evidence to the financial statements.___ 3. Audit of details of transactions and balances.___ 4. Audit procedure that provides compelling evidence of existence.___ 5. Direct correspondence with independent parties.___ 6. A list of audit procedures.arrow_forwardFor each of the procedures described in the table below, identify the audit procedure performed and classification of the audit procedure using the following: Audit Procedures: (1) Analytical procedure (2) Confirmation (3) Inquiry (4) Inspection of records or documents (5) Inspection of tangible assets (6) Observation (7) Recalculation (8) Reperformance Classification of Audit Procedure: (9) Substantive procedures (10) Test of controls Procedure Audit Procedure Classification of Audit Procedure a. Requested responses directly from customers as to amounts due. b. Compared total bad debts this year with the totals for the previous two years. c. Questioned management about likely total uncollectible accounts. d. Watched the accounting clerk record the daily deposit of cash receipts. e. Examined invoice to obtain evidence in support of the ending recorded balance of a customer. f. Compared a sample…arrow_forwardWhich of the following procedures is MOST likely to be performed before the balance sheet date? a. Determine the date of the Letter of Representations b. Make a legal determination whether fraud has occurred. c. Search for unrecorded liabilities. d. Confirmation of receivables. e. Updating the predecessor's audit report date.arrow_forward
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