Below are some audit procedures. Classify each procedure according to the following types of audit evidence: 1) inspection, 2) external confirmation, 3) recalculation, 4) observation, 5) inquiry of the cli 6) reperformance, and 7) analytical procedure. (each procedure can be used more than once or not all) Type of Evidence Audit Procedures Count inventory items and record the amount in the audit working papers. Stand by the payroll time clock to determine whether any employee "punches in" more than one time. Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year. Obtain information about the client's internal controls by asking questions of client personnel. Examine the purchase invoice for a piece of equipment and ensure that the equipment was received and is in operation. The auditor computes the debt covenant based on the financial information to ensure that the client's calculation was performed correctly. Obtain a written statement from the client's bank stating the client's vear c nd balance on deposit

Below are some audit procedures. Classify each procedure according to the following types of audit evidence: 1) inspection, 2) external confirmation, 3) recalculation, 4) observation, 5) inquiry of the cli 6) reperformance, and 7) analytical procedure. (each procedure can be used more than once or not all) Type of Evidence Audit Procedures Count inventory items and record the amount in the audit working papers. Stand by the payroll time clock to determine whether any employee "punches in" more than one time. Calculate the ratio of cost of goods sold to sales as a test of overall reasonableness of gross margin relative to the preceding year. Obtain information about the client's internal controls by asking questions of client personnel. Examine the purchase invoice for a piece of equipment and ensure that the equipment was received and is in operation. The auditor computes the debt covenant based on the financial information to ensure that the client's calculation was performed correctly. Obtain a written statement from the client's bank stating the client's vear c nd balance on deposit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.

Question

Below are some audit procedures. Classify each procedure according to the following types of audit
evidence: 1) inspection, 2) external confirmation, 3) recalculation, 4) observation, 5) inquiry of the client,
6) reperformance, and 7) analytical procedure. (each procedure can be used more than once or not at
all)
Audit Procedures
Count inventory items and record the amount in the audit working
papers.
Stand by the payroll time clock to determine whether any
employee "punches in" more than one time.
Calculate the ratio of cost of goods sold to sales as a test of
overall reasonableness of gross margin relative to the preceding
year.
Obtain information about the client's internal controls by asking
questions of client personnel.
Examine the purchase invoice for a piece of equipment and
ensure that the equipment was received and is in operation.
The auditor computes the debt covenant based on the financial
information to ensure that the client's calculation was performed
correctly.
Obtain a written statement from the client's bank stating the
client's year-end balance on deposit.
Type of Evidence

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Audit procedures for items of Financial Statement

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