The followings are 6 audit procedures that were performed in an audit of inventory.Compare the quantities on hand and unit prices on this year’s inventory count sheets with those in the preceding year as a test for large differences.Trail selected quantities from the inventory list to the physical inventory to make sure that it exists, and the quantities are the same.Test the extension of unit prices times quantity on the inventory list for a sample of inventory items, test foot the list, and compare the total to the general ledger.Send letters directly to third parties who hold the client’s inventory, and request that they respond directly to the auditors.Interview the operating personnel regarding the possibility of obsolete or slow-moving inventory.Examine sales invoices and contracts with customers to determine whether any goods are out on consignment with customers. Similarly, examine vendors’ invoices and contracts with vendors to determine whether any goods on the inventory listing are owned by vendors.REQUIRED:Identify the type of audit evidence used for each of the audit procedure above.Explain TWO (2) factors that determine the persuasiveness of audit evidence.

Audit evidence are the evidence an auditor collects while doing procedures to reach on a conclusion.

Answered: Identify the type of audit evidence…

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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The followings are 6 audit procedures that were performed in an audit of inventory.
Compare the quantities on hand and unit prices on this year’s inventory count sheets with those in the preceding year as a test for large differences.
Trail selected quantities from the inventory list to the physical inventory to make sure that it exists, and the quantities are the same.
Test the extension of unit prices times quantity on the inventory list for a sample of inventory items, test foot the list, and compare the total to the general ledger.
Send letters directly to third parties who hold the client’s inventory, and request that they respond directly to the auditors.
Interview the operating personnel regarding the possibility of obsolete or slow-moving inventory.
Examine sales invoices and contracts with customers to determine whether any goods are out on consignment with customers. Similarly, examine vendors’ invoices and contracts with vendors to determine whether any goods on the inventory listing are owned by vendors.

REQUIRED:

Identify the type of audit evidence used for each of the audit procedure above.

Explain TWO (2) factors that determine the persuasiveness of audit evidence.

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