Develop TWO audit procedures to gather sufficientand appropriate testing for Operating expenses,Accounts Receivables, Inventory, Cost of Goods Sold,Dividends, Cash and Cash Equivalents, Other Incomeand Retained Earnings.Explain the objective of each procedure: What risk orissue are you trying to address with the procedure?

The first procedure involves the examination of invoices, receipts, and other documents related to…

Answered: Develop TWO audit procedures to gather…

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter2: Audits Of High-risk Accounts

Section2.7: Bankrate, Inc.

Problem 4Q

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Auditors try to identify predictable relationships when using analytical procedures. Relationships involving transactions from which of the following accounts would most likely yield the highest level of evidence? a. Accounts receivable. O b. Interest expense. O c. Travel and entertainment expense. O d. Accounts payable.
Auditors try to identify predictable relationships when using analytical procedures. Relationshiipss involvingtransactions fromwhich of the following accounts most likely would yield the highest level of evidence? a. accounts receivable b. interest expense c. accounts payable d. Travel and entertainment expense
In developing relationships among balance sheet accounts when reviewing the financial statements of anentity, what type of analytical procedure would an auditor most likely use? Select one: a. Ratio analysis. b. Trend analysis. c. Risk analysis. d. Regression analysis.
Which is not a Risk Assessment Procedure? a. Ratio Analysis b. Observation of Activities c. Account Receivable confirmations d. Inspection of Documents e. Inquiry of Internal Auditors
In auditing the accrued liabilities account on the Balance Sheet, an auditor’s procedures most likely would focus primarily on management’s assertion ofa. Existence or occurrence.b. Completeness.c. Presentation and disclosure.d. Valuation or allocation.
An auditor reviews aged accounts receivable to assess likelihood of collection to support management’s assertion about account balances of: Select one: a. rights and obligations b. existence. c. valuation and allocation d. completeness
An audit team would most likely examine the detail support for charges to which of the following accounts?a. Payroll expense.b. Cost of goods sold.c. Supplies expense.d. Legal expense.
What substantive analytical procedures might an auditor use to perform an analytical procedure for accounts payable? Please provide reference(s).
Discuss the meaning of the following terms and how they apply to auditing accounts receivable: a. tie-in b. completeness c. existence d. accuracy e. rights f. realizable value g. cutoff h. classification Please provide references.
Which of the following audit procedures is least appropriate for addressing the assertion of valuation of liabilities? a. Confirm with creditors b. Test for unrecorded liabilities. c. Perform analytical procedures. d. Verify accounts payable trial balance
Analytical procedures consist of evaluating financial information by studying financial and nonfinancial data and looking for plausible or implausible relationships. The procedures can range from making simple comparisons to using complex models involving many relationships and elements of data. They can involve time-series comparisons of recorded amounts and ratios developed from recorded amounts, and they always include comparison to expectations developed by the auditors Describe three purposes of analytical procedures. ) Identify three sources of information from which an auditor develops expectations when performing analytical procedures
Professional guidance indicates that the auditor should consider revenue recognition to be high risk in planning an audit of a company’s financial statements. a. Identify the activities that affect the revenue cycle. b. Identify the financial statement accounts typically associated with the revenue cycle.

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