Auditing And Assurance Services
Auditing And Assurance Services
17th Edition
ISBN: 9780134897431
Author: ARENS, Alvin A.
Publisher: PEARSON
Question
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Chapter 7, Problem 32DQP

a.

To determine

List the six factors that determine the reliability of evidence.

b.

To determine

Identify whether the first or second type of evidence is more reliable.

c.

To determine

Identify the six factors that affects the reliability of the evidence.

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The following are five situations, each containing two means of accumulating evidence: 1. Confirm receivables with consumers versus confirming accounts receivable with business organizations. 2. Examine duplicate sales invoices when several competent people are checking each other’s work versus examining documents prepared by a competent person on a one-person staff. 3. Physically examine inventory of parts for the number of units on hand versus examining them for the likelihood of inventory being obsolete. 4. Confirm a bank balance versus examining the client’s bank statements. 5. Obtain a physical inventory count from the company president versus physically counting the client’s inventory. Required:a. Identify the factors (at least 5 factors) that determine the reliability of evidence. For each factor, give one example of evidence that is likely to be reliable. b. For each of the five situations, state whether the first or second type of evidence is more reliable. c. For each…
You are the audit senior assigned to the audit of Fix-IT Ltd, a motor vehicle spares company.You obtain an understanding of the warehouse function within the revenue and receipts cycle at Fix-IT Ltd.The warehouse clerk accesses the internal sales order file with all the internal sales orders arranged by order numbers. They will then select the sales order for picking. Identify the type of access that the warehouse clerk should have to the internal sales order file. a. A. Read-only access b. B. Write-only access. C. D. Both write and read access d. C. No access
Collecting Evidence in a Fraud Examination. A fraud examiner was called into a businessbecause of a suspicion of fraud. An assistant manager in a bookstore is taking books off theshelf, bringing them to the return book area, completing a customer return form, and pocketing the money. This is done late in the day when few other employees are in the store and areinvolved in closing activities that occupy them in other areas.Required:a. What are the objectives of the fraud examiner in performing a fraud examination?b. What evidence could the fraud examiner obtain that would help reach the objectives ofthe audit?c. How should the fraud examiner handle the evidence obtained?
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