You are employed by an external audit firm that is hired by JBltd, a privately owned incorporated business. Accounting records are maintained on a computer using proprietary software. You have worked on the audit for three years and this year you are in charge of the audit. Your assistant is a newly recruited business graduate who has done an accounting course but has no practical experience. Because of the small size of the company there is limited opportunity for segregation of duties. You decide, as in previous years, that the appropriate audit strategy is to obtain evidence primarily through the performance of substantive procedures. You also plan to perform the audit around the computer as the proprietary software is known to be reliable and details of all transactions and balances can be readily printed out. On arriving at the company's premises in December 2019 to perform the final audit on the 31 October 2019 financial statements, you obtain a copy of the year end bank reconciliation prepared by the bookkeeper and checked by the managing director. This is reproduced below. JB Bank Reconciliation 31 October 2019 $ $ Balance per bank statement 31 October 2019 36,752.00 Deposits outstanding 30 October 3,774.00 31 October 3,946.00 7,720.00 44,472.00 Outstanding cheques $ 1348 50.00 1362 578.00 1363 138.00 1364 1448.00 1365 3800.00 1366 796.00 1367 108.00 1368 3552.00 1369 512.00 11,982.00 32,490.00 Cheque returned 'not sufficient funds' 30 October 696.00 Bank charges October 180.00 Balance per books 31 October 2019 33,366.00 You have already obtained the bank confirmation and lists of cash (and cheque) receipts and payments printed out from the computer. These lists have been added and the totals agreed with ledger postings. You decide the first task to set for your assistant is the verification of the bank reconciliation. Required 1. a. List the audit procedures to be followed by your assistant in verifying the bank reconciliation in sufficient detail for an inexperienced staff member to follow. b. Explain the purpose of each procedure in terms of audit objectives. 2. Discuss the reliability of bank statements as audit evidence. What steps can be taken if it is considered desirable to increase their reliability? 3. a. Distinguish between 'auditing around the computer' and 'auditing through the computer'. b. Explain the circumstances when it would be inappropriate for the auditor to rely on auditing around the computer.