(Objectives 13-1, 13-2, 13-3, 13-6) The following are audit procedures from different transaction cycles:
1. Examine sales invoices for evidence of internal verification of prices, quantities, and extensions.
2. Select items from the client’s perpetual inventory records and examine the items in the company’s warehouse.
3. Use audit software to foot and cross-foot the cash disbursements journal and trace the balance to the general ledger.
4. Select a sample of entries in the acquisitions journal and trace each one to a related vendor’s invoice to determine whether one exists.
5. Examine documentation for acquisition transactions before and after the balance sheet date to determine whether they are recorded in the proper period.
6. Inquire of the credit manager whether each account receivable on the aged trial balance is collectible.
7. Compute inventory turnover for each major product and compare with previous years.
8. Confirm a sample of notes payable balances, interest rates, and collateral with lenders.
9. Use audit software to foot the accounts receivable trial balance and compare the balance with the general ledger.
a. For each audit procedure, identify the transaction cycle being audited.
b. For each audit procedure, identify the type of evidence.
c. For each audit procedure, identify whether it is a test of control or a substantive test.
d. For each substantive audit procedure, identify whether it is a substantive test of transactions, a test of details of balances, or an analytical procedure.
e. For each test of control or substantive test of transactions procedure, identify the transaction-related audit objective or objectives being satisfied.
f. For each analytical procedure or test of details of balances procedure, identify the balance-related audit objective or objectives being satisfied.
Objective 13-1
Use the five types of audit tests to determine whether financial statements are fairly stated.
Objective 13-2
Select the appropriate types of audit tests.
Objective 13-3
Understand how information technology affects audit testing.
Objective 13-6
Compare and contrast transaction-related audit objectives with balance-related and presentation and disclosure-related audit objectives.
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