The following matters were noted in the audit of Tools N Things: a. An order was never billed because the shipping document was misplaced. b. A sale that occurred on December 31, the last day of the accounting period, was recorded on January 2 of the following year. c. A cash collection for the account of Tom Co. was misappropriated by the cashier. d. The accounts receivable clerk posted to Bambi's account a sale made to Bamba. e. A shipment of 6 pairs of Product Code 123 was made instead of the ordered 6 pieces. Required: Answer the following questions for each of the above matters: 1. What control would have prevented or detected the misstatement? 2. What audit procedure should the auditor perform to test the control? 3. To which financial statement assertion does the misstatement relate?
The following matters were noted in the audit of Tools N Things: a. An order was never billed because the shipping document was misplaced. b. A sale that occurred on December 31, the last day of the accounting period, was recorded on January 2 of the following year. c. A cash collection for the account of Tom Co. was misappropriated by the cashier. d. The accounts receivable clerk posted to Bambi's account a sale made to Bamba. e. A shipment of 6 pairs of Product Code 123 was made instead of the ordered 6 pieces. Required: Answer the following questions for each of the above matters: 1. What control would have prevented or detected the misstatement? 2. What audit procedure should the auditor perform to test the control? 3. To which financial statement assertion does the misstatement relate?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following matters were noted in the audit of Tools N Things:
a. An order was never billed because the shipping document was
misplaced.
b. A sale that occurred on December 31, the last day of the accounting
period, was recorded on January 2 of the following year.
c. A cash collection for the account of Tom Co. was misappropriated by
the cashier.
d. The accounts receivable clerk posted to Bambi's account a sale made to
Bamba.
e. A shipment of 6 pairs of Product Code 123 was made instead of the
ordered 6 pieces.
Required: Answer the following questions for each of the above matters:
1. What control would have prevented or detected the misstatement?
2. What audit procedure should the auditor perform to test the control?
3. To which financial statement assertion does the misstatement relate?
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