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Homework answers / question archive / Tools View Assignment - Word Question 1: Identify and explain (justify your answer) the sutible assurance for each of the cases below: An engagement supervisor has asked the audit assistant to perform the following procedures related to an engagement For each procedure listed, identify the financial statement assertion being tested by double-clicking on a shaded cell and selecting the appropriate option from the list provided
Tools View Assignment - Word Question 1: Identify and explain (justify your answer) the sutible assurance for each of the cases below: An engagement supervisor has asked the audit assistant to perform the following procedures related to an engagement For each procedure listed, identify the financial statement assertion being tested by double-clicking on a shaded cell and selecting the appropriate option from the list provided. Select Item Completeness (account balances) Completeness (transactions and events) Completeness (presentation and disclosure) Existence 1. Examine consignment agreements. 2. Examine check register for the month following year- end for disbursements relating to the current period. 3. Review bond indenture agreement and ascertain that the client has complied with any restrictive covenants. 4. Inspect major new additions to furniture and fixtures during the current period. 5. Ascertain that the financial statements comply with GAAP requirements surrounding the classification of investment securities as current or noncurrent assets 6. Test the aging of accounts receivable. discussing long-overdue accounts with the client's credit manager 7. Observe procedures, including segregation of duties. for approving sales orders. 8. Trace shipping documents to sales invoices. 9. Reperform check on accuracy of vendor invoice pricing 10 Trace beginning balance for inventory to prior year's audit documentation Occurrence Allocation and valuation Rights and obligations Understandability and classification OK Cancel elve Windows C Focus 00 73 of 4 ge 0 W Type here to search
1. Rights and obligations
2. Completeness (account balances)
3. Completeness (presentation and disclosure)
4. Existence
5. Understandability and classification
6. Allocation and valuation
7. Occurence
8. Completeness (transactions and events)
9. Allocation and valuation
10. Allocation and valuation
Justifications
1. By examining consignment agreements, the rights and obligations of both the consignor and consignee can be easily understandable.
2. By examining the check register the auditor can understand the completeness of account balances. The auditor can understand the disbursements related with current period.
3. By reviewing bond indenture agreement the auditor can understand that the client has complied with any restrictive covenants. This is because of the completeness of accounts in dealing with presentation and disclosure. If the company disclose and present its full affairs to the auditor, then only the auditor can understand these agreements.
4. To know about the physical existence of the fixed asset, the auditor must inspect the assets. The auditor must inspect major additions to furniture and fixtures during the current period inorder to know about the existence of the asset.
5. Every firm must classify the investments as current or noncurrent assets and comply with the GAAP requirements. Inorder to know about this, the auditor must understand about the preparation of financial statements of the concern and their classification of assets.
6. The auditor must allocate and value the accounts receivable and accounts payable. The auditor must know about how long the firm is taken, to collect its receivables and how long to pay off its payables.
7. The auditor must examine the procedures and segregation of duties for approving sales orders. This examination on sales order is done to know about the occurence of the orders.
8. Inorder to know about the completeness of transactions and events, the auditor must enquire into the supporting documents. By trace shipping documents to sales invoices, the auditor can know about the completeness of the transaction.
9. The auditor check the vendor invoice pricing inorder to ensure the accuracy of the pricing and is directly leads to the allocation and valuation of accurate invoice pricing.
10. The auditor must allocate and value the beginning value of inventory for the purpose of prior year's audit documentation.
