Question

6-33 (OBJECTIVES 6-8, 6-9) The following are specific transaction-related audit objectives applied to the audit of cash disbursement transactions (a. through f.), management assertions about classes of transactions and events and related disclosures (1 through 6), and general transaction-related audit objectives (7 through 13).

Specific Transaction-Related Audit Objective

a. Existing cash disbursement transactions are recorded.

b. Recorded cash disbursement transactions are for the amount of goods or services received and are correctly recorded.

c. Cash disbursement transactions are properly included in the accounts payable master file and are correctly summarized.

d. Recorded cash disbursements are for goods and services actually received.

e. Cash disbursement transactions are properly classified.

f. Cash disbursement transactions are recorded on the correct dates. Management Assertion About Classes of Transactions General Transaction-Related Audit Objective

1. Occurrence 2. Completeness 3. Accuracy 4. Classification 5. Cutoff 6. Presentation 7. Occurrence 8. Completeness 9. Accuracy 10. Posting and summarization 11. Classification 12. Timing 13. Presentation

a. Explain the differences among management assertions about classes of transactions and events and related disclosures, general transaction-related audit objectives, and specific transaction-related audit objectives and their relationships to each other.

b. For each specific transaction-related audit objective, identify the appropriate management assertion.

c. For each specific transaction-related audit objective, identify the appropriate general transaction-related audit objective.

Answer 1

a) Management assertions are representations by management regarding classes of transactions. General transaction-related audit objectives enables audito in deciding about particular audit evidence necessity in satisfying management assertion. Whereas, Specific transaction related audit objectives are identified by auditor for each transaction cycle and for each general transaction-related audit objective. It makes easy for auditor to make conclusion about specific amount of evidence required.

b) a. Existing cash disbursement transactions are recorded : Accuracy Assertion

b. Recorded cash disbursement transactions are for the amount of goods or services received and are correctly recorded : Accuracy Assertion

c. Cash disbursement transactions are properly included in the accounts payable master file and are correctly summarized : Occurence Assertion

d. Recorded cash disbursements are for goods and services actually received : Classification Assertion

e. Cash disbursement transactions are properly classified : Completeness Assertion

f. Cash disbursement transactions are recorded on the correct dates : Cut off Assertion

c) a. Existing cash disbursement transactions are recorded : Accuracy Assertion

b. Recorded cash disbursement transactions are for the amount of goods or services received and are correctly recorded : Posting and Summarization Assertion

c. Cash disbursement transactions are properly included in the accounts payable master file and are correctly summarized : Occurence Assertion

d. Recorded cash disbursements are for goods and services actually received : Classification Assertion

e. Cash disbursement transactions are properly classified : Completeness Assertion

f. Cash disbursement transactions are recorded on the correct dates : Timing Assertion