Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Question
Chapter 11, Problem 36EOQ
To determine
Identify the other criteria for the auditors to confirm accounts receivables when there is a low risk of material misstatement.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
If the auditor concludes that there is a high likelihood of material misstatement in accounts receivable due to changing economic conditions, the auditor concludes that inherent risk for accounts receivab is low.
Select one: OTrue O False e
Read the case. Then answer the questions based on it.
BACKGROUND:
Audit standards indicate that there is a presumption that auditors will confirm accounts receivable unless the balance is immaterial, confirmations are deemed ineffective, or the auditors' assessment of risk is low and other procedures will achieve the same objective. However, these instances are considered few and far between and current trends in auditing indicate that there is an expectation that accounts receivable will be confirmed. Auditors may stratify the population, use haphazard or judgmental sampling, and send positive or negative requests.
Jenner & Jenner CPAs are the auditors for the Leno Company. In reviewing the accounts receivable aging, the auditors learn that there is a high number of accounts with balances, there are some very large and very small balances, and many customers' balances consist of multiple invoices.
2. How should the auditors mitigate the risk associated with both very large and…
3. An auditor should perform alternative procedures to substantiate the existence of accounts receivable when
a. Pledging of the receivables is probable
b. No reply to a negative confirmation request is received
c. No reply to a positive confirmation request is received
d. Collectibility of the receivable sis in doubt
Chapter 11 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 11 - Explain the difference between a customers order...Ch. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - State briefly the objective of the billing...Ch. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 10RQ
Ch. 11 - Prob. 11RQCh. 11 - Prob. 12RQCh. 11 - Prob. 13RQCh. 11 - Prob. 14RQCh. 11 - Prob. 15RQCh. 11 - Prob. 16RQCh. 11 - Prob. 17RQCh. 11 - Prob. 18RQCh. 11 - Prob. 19RQCh. 11 - Prob. 20RQCh. 11 - Prob. 21RQCh. 11 - Prob. 22RQCh. 11 - Give an example of a type of receivable...Ch. 11 - Prob. 24RQCh. 11 - Prob. 25QRACh. 11 - Prob. 26QRACh. 11 - Prob. 27QRACh. 11 - Prob. 28QRACh. 11 - Prob. 29QRACh. 11 - Prob. 30QRACh. 11 - Prob. 31QRACh. 11 - Prob. 32QRACh. 11 - Prob. 33QRACh. 11 - Prob. 34QRACh. 11 - Prob. 35QRACh. 11 - Prob. 36AOQCh. 11 - Which of the following would provide the most...Ch. 11 - Prob. 36COQCh. 11 - Prob. 36DOQCh. 11 - Prob. 36EOQCh. 11 - Under SEC rules, which of the following is not...Ch. 11 - Prob. 36GOQCh. 11 - Prob. 36HOQCh. 11 - Prob. 36IOQCh. 11 - Prob. 36JOQCh. 11 - Prob. 36KOQCh. 11 - Prob. 36LOQCh. 11 - Prob. 37OQCh. 11 - Prob. 38OQCh. 11 - An auditors working papers include the following...Ch. 11 - Prob. 40OQCh. 11 - Prob. 41OQCh. 11 - Prob. 42OQCh. 11 - Prob. 43OQCh. 11 - Prob. 44PCh. 11 - Prob. 45PCh. 11 - Prob. 46PCh. 11 - Prob. 47PCh. 11 - The July 31, 20X0, general ledger trial balance of...Ch. 11 - Prob. 49ITCCh. 11 - Prob. 50ECCh. 11 - Prob. 51EC
Knowledge Booster
Similar questions
- Physical examination is usually more costly than observation. True False Analytical procedures are usually the most costly type of evidence. True False Physical examination is normally more reliable than observation. True False Inquiries of the client are rarely sufficient by themselves to provide competent evidence to satisfy an audit objective. True False A canceled check written by the client, made payable to a local vendor, and drawn on the client’s bank account is one type of internal document. True Falsearrow_forwardIn auditing accounts receivable, the negative form of confirmations request is used when A. Response rate to positive confirmation request was low B. The total amount of account receivable is immaterial to the financial statement taken as a whole C. Recipients are likely to return positive confirmation without verifying the information D. The combined assessed level of both inherent risk and control risk relative to account receivable is lowarrow_forwardWhen an audit team does not receive a response on a positive accounts receivable confirmation, auditors should do all of the following excepta. Send a second request.b. Do nothing for immaterial balances.c. Examine shipping documents.d. Examine client correspondence files.arrow_forward
- Confirmation of accounts receivable that have been categorized initially by an auditor as "exceptions" most likely could be due to: O Responses that were mailed rather than faxed to the auditor. O Customers who have credit or zero balances with the client. Payments mailed to the client that have not been recorded. O Accounts receivable that have been classified as uncollectablearrow_forwardWhich of the following is most closely related to the relevance of audit evidence?a. Auditors decide to physically inspect investment securities held by a custodian instead of obtaining confirmations from the custodian.b. In addition to confirmations of accounts receivable, auditors perform an analysis of the aging of accounts receivable to evaluate the collectability of accounts receivable.c. In response to less effective internal control, auditors increase the number of customer accounts receivable confirmations mailed compared to that in the prior year.d. Because of a large number of transactions occurring near year-end, auditors decide to confirm a larger number of receivables following year-end instead of during the interim period.arrow_forwardWhich of the following statements about confirming accounts receivable (A/R) and accounts payable (A/P) is true? Question options: A/R confirmations are more likely to include the client's balance than A/P confirmations. A/R and A/P are always confirmed regardless of the materiality of the balance or risks of material misstatement. The assertion with the highest risk of material misstatement for A/R and A/P is Existence. Positive and negative confirmations are always used to audit A/R and A/P.arrow_forward
- Which of the following statements describes why a properly designed and executedaudit may not detect a material misstatement in the financial statements resultingfrom fraud?(1) Audit procedures that are effective for detecting unintentional misstatements maybe ineffective for an intentional misstatement that is concealed through collusion.(2) An audit is designed to provide reasonable assurance of detecting materialerrors, but there is no similar responsibility concerning fraud.(3) The factors considered in assessing control risk indicated an increased risk ofintentional misstatements, but only a low risk of unintentional misstatements.(4) The auditor did not consider factors influencing audit risk for account balancesthat have effects pervasive to the financial statements taken as a wholearrow_forwardThe risk that the auditors will conclude, based on substantive procedures, that a material misstatement does not exist in an account balance when, in fact,arrow_forwardi need the answer quicklyarrow_forward
- Plz don’t make answer long ??arrow_forwardInquiries of clients and reperformance normally have a low cost to perform. True False When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of details of balance for that account. True False When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of controls for that account. True False Analytical procedures can be used to provide reliable evidence for all balance-related general audit objectives. True False One advantage of using statical techniques when performing analytical procedures is that they eliminate the need for auditor judgement. True False The type of audit evidence known as documentation involves the auditor’s examination of tangible assets with results of the examination being recorded, or “documented,” in the auditor’s work papers. True False If a company’s cash ratio is greater than 1.0, the company is…arrow_forwardwhen the auditor want to assure that There are no unrecorded receivables. What assertion he or she want to test : Select one: a. Rights and obligations b. Valuation and allocation c. Completeness d. Existencearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub