order to form an audit opinion, auditors must obtain sufficient appropriate audit evidence. ISA 500 identifies the types of auditing procedures that an auditor might carry out in order to obtain audit evidence. The auditor is planning for the audit of a We can LLC, assembles specialist motor vehicles for industrial purposes such as earth movers and trucks. The total assets of the business are OMR 150 Million. The company owns four assembly plants to which parts are delivered and assembled into the motor vehicles. The auditor believes that the financial statements are at risk of material misstatement but as the part of his audit engagement an auditor wishes to: 1. Test the plant and equipment recorded in the financial statements of the We can LLC does exist in all four assemble plants. 2. Test the Sales transaction have been recorded in the financial statements at appropriate amount. 3. Test the cash balance has been included in the financial statements at appropriate amount. 4. Test all Bank Balances that should have been recorded with appropriate amount. 5. Understand the nature of an unusual payment and purchases recorded in the cash book. 6. Test the Inventories that have been recorded does exist in all four assemble part. Required Part A. Considering the broad categories of types of auditing procedures for obtaining audit evidence below, give examples, where

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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In order to form an audit opinion, auditors must obtain sufficient appropriate audit evidence. ISA 500 identifies the types of auditing procedures that an auditor might carry out in order to obtain audit evidence. The auditor is planning for the audit of a We can LLC, assembles specialist motor vehicles for industrial purposes such as earth movers and trucks. The total assets of the business are OMR 150 Million. The company owns four assembly plants to which parts are delivered and assembled into the motor vehicles. The auditor believes that the financial statements are at risk of material misstatement but as the part of his audit engagement an auditor wishes to: 1. Test the plant and equipment recorded in the financial statements of the We can LLC does exist in all four assemble plants. 2. Test the Sales transaction have been recorded in the financial statements at appropriate amount. 3. Test the cash balance has been included in the financial statements at appropriate amount. 4. Test all Bank Balances that should have been recorded with appropriate amount. 5. Understand the nature of an unusual payment and purchases recorded in the cash book. 6. Test the Inventories that have been recorded does exist in all four assemble part. Required Part A. Considering the broad categories of types of auditing procedures for obtaining audit evidence below, give examples, where applicable, of specific audit procedures would be most useful to the auditor in each of the above circumstances. 1. Inspection. 2. Observation. 3. Confirmation. 4. Recalculation. 5. Re-performance. 6. Analytical procedures. 7. Inquiry. Part B. As an auditor of the We can LLC, Describe the quality of the following types of audit evidence with two examples of each form of evidences obtained during the engagement. 1. Evidences directly obtained by the Auditor. 2. Evidences created by the third parties. 3. Evidences created by entity or management.

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