Question

Hi, need a help with a series a short exercises. Thanks for the help

You are the staff auditor on an engagement and have performed the following audit procedures. Identify the transaction cycle being audited and explain the objective of the test (i.e.-this is testing whether the sales account is accurately recorded.)

1. Select a sample of payroll checks of hourly employees and agree the hours to the employee time records.

Transaction Cycle:

Test Objective:

2. Trace the auditor’s count of the inventory items in the warehouse to the final inventory count recorded by the client.

Transaction Cycle:

Test Objective:

3. Select a sample of entries in the fixed assets acquisitions journal and trace each one to a related vendor’s invoice.

Transaction Cycle:

Test Objective:

Answer 1

1. Objective: Payroll expenses booked by the company are correct and it is being paid to individuals and not to the ghost employees.

Assertion addressed- Occurence.

2. Objective: The Inventory recorded by the client is actually existing and its quality corresponds to the amount reflected by the client.

Assertion addressed- Existence, valuation and Rights and Obligations

3. Objective: The Fixed assets additions are correctly recorded and are supported by valid vendor invoices.

Assertions addressed- Occurence, Measurement, Disclosures