Homework Help is Here – Start Your Trial Now!
Business
Accounting
Required: For each activity, state: (a) The type of procedure to collect evidence the audit activity represents, and (b) The type of audit test procedure to which each audit activity relates. You should present your answer in the following table format in your answer booklet: Activity No. Procedure to collect evidence Type of audit test procedure

Required: For each activity, state: (a) The type of procedure to collect evidence the audit activity represents, and (b) The type of audit test procedure to which each audit activity relates. You should present your answer in the following table format in your answer booklet: Activity No. Procedure to collect evidence Type of audit test procedure

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

10.

The following are normal audit activities undertaken as routine in most audits: 1. Obtain a sample of employee files and check that their latest pay increases have been correctly processed. 2. Discuss with the Finance Manager the review process she performs on the end-of-the-period account balance reconciliations. 3. Send a letter to the financial institutions listed in the company's register to confirm oustanding loan balances. 4. Attend and watch the counting of inventory by the employees at the company's main warehouse. 5. Reconcile the creditors account balance and agree the result to the client's own reconciliation. 6. Speak to the Finance Manager about the approval process required to write off bad debts. 7. Count a sample of high value inventories and agree the results to the client's count totals. 8. Watch the company's cashiers count the cash collected at the end of the day. 9. Speak to the Finance Manager about the checking process she performs to ensure that leases are properly classified and disclosed in the financial statements. 10. Calculate the discount allowance for a sample of transactions and agree to the client's calculation. 11. Discuss the increase in payment to contractors expense account recorded in this year's financial statements with the Finance Manager. 12. Compare this year's salaries and wages expense to this year's budget estimate to determine whether the budget is accurate. 13. Request permission from the Finance Manager to look at a sample of inventory items returned from customers due to poor quality. 14. Request permission from the Warehouse Manager to look at inventory items that are unsold for more than 12 months.
Transcribed Image Text:The following are normal audit activities undertaken as routine in most audits: 1. Obtain a sample of employee files and check that their latest pay increases have been correctly processed. 2. Discuss with the Finance Manager the review process she performs on the end-of-the-period account balance reconciliations. 3. Send a letter to the financial institutions listed in the company's register to confirm oustanding loan balances. 4. Attend and watch the counting of inventory by the employees at the company's main warehouse. 5. Reconcile the creditors account balance and agree the result to the client's own reconciliation. 6. Speak to the Finance Manager about the approval process required to write off bad debts. 7. Count a sample of high value inventories and agree the results to the client's count totals. 8. Watch the company's cashiers count the cash collected at the end of the day. 9. Speak to the Finance Manager about the checking process she performs to ensure that leases are properly classified and disclosed in the financial statements. 10. Calculate the discount allowance for a sample of transactions and agree to the client's calculation. 11. Discuss the increase in payment to contractors expense account recorded in this year's financial statements with the Finance Manager. 12. Compare this year's salaries and wages expense to this year's budget estimate to determine whether the budget is accurate. 13. Request permission from the Finance Manager to look at a sample of inventory items returned from customers due to poor quality. 14. Request permission from the Warehouse Manager to look at inventory items that are unsold for more than 12 months.
15. Compare this year's provision for doubtful debts to the prior year's to determine whether changes recently made to the debt collection policy is effective. Required: For each activity, state: (a) The type of procedure to collect evidence the audit activity represents, and (b) The type of audit test procedure to which each audit activity relates. You should present your answer in the following table format in your answer booklet: Activity No. Type of audit test procedure Procedure to collect evidence
Transcribed Image Text:15. Compare this year's provision for doubtful debts to the prior year's to determine whether changes recently made to the debt collection policy is effective. Required: For each activity, state: (a) The type of procedure to collect evidence the audit activity represents, and (b) The type of audit test procedure to which each audit activity relates. You should present your answer in the following table format in your answer booklet: Activity No. Type of audit test procedure Procedure to collect evidence
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS