Principles of Auditing & Other Assurance Services (Irwin Accounting)
20th Edition
ISBN: 9780077729141
Author: Ray Whittington, Kurt Pany
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 43EOQ
To determine
Identify the appropriate answer regarding the least reliable audit evidence.
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Which of the following would provide an auditor with the most reliable evidence reguarding the existence of accounts receivable?
A. A copy of the invoice sent to the customer.
B. Acopy of the customer's sales order held by the client.
C. An accounts receivable confirmation received by the auditor from the client's customer.
D. An aging schedule showing the composition of the year-end-accounts receivable balance.
Which of the following is one of the better auditing techniques to detect kiting?(1) Review composition of authenticated deposit slips.(2) Review subsequent bank statements and cancelled checks received directlyfrom the banks.(3) Prepare year-end bank reconciliations.(4) Prepare a schedule of bank transfers from the client’s books
Which of the following procedures will an auditor most likely perform for year-endaccounts receivable confirmations when the auditor did not receive replies to secondrequests?(1) Review the cash receipts journal for the month prior to year end.(2) Intensify the study of internal control concerning the revenue cycle.(3) Inspect the shipping records documenting the merchandise sold to the debtors.(4) Increase the assessed level of detection risk for the existence assertion.
Chapter 5 Solutions
Principles of Auditing & Other Assurance Services (Irwin Accounting)
Ch. 5 - Prob. 1RQCh. 5 - Prob. 2RQCh. 5 - Prob. 3RQCh. 5 - Distinguish among routine, nonroutine, and...Ch. 5 - Prob. 5RQCh. 5 - Prob. 6RQCh. 5 - Prob. 7RQCh. 5 - As part of the verification of accounts receivable...Ch. 5 - Prob. 9RQCh. 5 - When in the course of an audit might the auditors...
Ch. 5 - Prob. 11RQCh. 5 - Prob. 12RQCh. 5 - Prob. 13RQCh. 5 - Prob. 14RQCh. 5 - Prob. 15RQCh. 5 - Prob. 16RQCh. 5 - Prob. 17RQCh. 5 - What disclosures should be made in the financial...Ch. 5 - Prob. 19RQCh. 5 - Prob. 20RQCh. 5 - Prob. 21RQCh. 5 - Prob. 22RQCh. 5 - Prob. 23RQCh. 5 - Prob. 24RQCh. 5 - Prob. 25RQCh. 5 - Prob. 26RQCh. 5 - Prob. 27RQCh. 5 - Prob. 28RQCh. 5 - Prob. 29RQCh. 5 - I have finished my testing of footings of the cash...Ch. 5 - Prob. 31RQCh. 5 - Prob. 32RQCh. 5 - Financial statements contain a number of...Ch. 5 - Prob. 34QRACh. 5 - In an audit of financial statements, the auditors...Ch. 5 - Prob. 36QRACh. 5 - Prob. 37QRACh. 5 - Prob. 38QRACh. 5 - Prob. 39QRACh. 5 - Prob. 40QRACh. 5 - Prob. 41QRACh. 5 - Prob. 42QRACh. 5 - Prob. 43AOQCh. 5 - Prob. 43BOQCh. 5 - Prob. 43COQCh. 5 - Prob. 43DOQCh. 5 - Prob. 43EOQCh. 5 - Prob. 43FOQCh. 5 - Prob. 43GOQCh. 5 - Prob. 43HOQCh. 5 - Prob. 43IOQCh. 5 - Prob. 43JOQCh. 5 - Prob. 43KOQCh. 5 - A difference of opinion concerning accounting and...Ch. 5 - Prob. 44OQCh. 5 - Prob. 45OQCh. 5 - Prob. 46AOQCh. 5 - Prob. 46BOQCh. 5 - Prob. 46COQCh. 5 - The cost of analytical procedures in terms of time...Ch. 5 - Prob. 46EOQCh. 5 - Prob. 47OQCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - Prob. 51PCh. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 56RDC
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Similar questions
- Which of the following types of documentary evidence should the auditor consider the most reliable?a. Sales invoice created by the client with the support of proof of delivery from an outside delivery serviceb. Confirmation of debt balances sent and returned directly to the auditorc. Check made by the company and includes a sign of approval of the party receiving the money, which is included in the bank statement sent directly to the auditord. An audit list prepared by the client controller and reviewed by the client treasurer.arrow_forwardWhich among the following types of audit evidence can be considered the most reliable? a.Verbal reply from management that the accounts receivable are fairly presented. b.Sales invoice with alteration submitted to the audit team by the company that has weak internal control. c.Photocopy of the building insurance document. d.Confirmation of cash balance directly obtained by the audit team leader from the bank.arrow_forwardWhen an auditor sends out bank confirmations at the year-end audit, they are performing a(n) O analytical procedure. O test of the details of balances. O key item test. O test of the details of transactions.arrow_forward
- When auditing contingent liabilities, which of the following procedures would be MOST effective? a. Reviewing the allowance for doubtful accounts. b. Reviewing the bank cutoff statement. c. Examining customer confirmation replies. d. Examining invoices for repairs expense. e. Abstracting the minutes of the board of directors.arrow_forwardWhich of the following is an effective audit procedure that an auditor might use to detect kiting between intercompany banks?a. Review the composition of authenticated deposit slips.b. Review subsequent bank statements.c. Prepare a schedule of the bank transfers.d. Prepare a year-end bank reconciliation.arrow_forwardWhen planning to perform an audit, an accountant must have a clear understanding of audit risk and its components. The existing audit risk components consist of: 1. Control Risk 2. Detection Risk 3. Inherent Risk For each of the following situations, determine the component of audit risk that exists and explain why. 1. The client failed to find fraud committed by his employees as early as possible because the client did not reconcile the bank balance every month. 2. The auditor's confirmation of accounts receivable failed to detect material misstatements in the sales and accounts receivable accounts. 3. Procedure for disbursement of money at the client which is carried out without the approval of the authorized officialarrow_forward
- Which of the following substantive procedures would auditors most likely perform to obtain evidence about the occurrence of subsequent events?a. Recompute a sample of large-dollar transactions occurring after the date of the financial statements for arithmetic accuracy.b. Investigate changes in shareholders’ equity occurring after the date of the financial statements.c. Send confirmations to vendors with whom the client normally does business but for which no balance in accounts payable is noted.d. Confirm bank accounts established after the date of the financial statements.arrow_forwardWhich of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? *A. Scan the cash disbursements entries recorded just before year end for indications of unusual transactions.B. Compare a sample of purchase orders issued just after year end with the year-end accounts payable trial balance.C. Obtain a copy of the receiving report until year end and its related sales invoice and trace them to the purchases journal.D. Compare the entries recorded in the purchases journal and the cash disbursements journal just before year end.arrow_forward1. Which of the following substantive audit procedures is least likely to be performed by the auditor to gather evidence in support of outstanding checks? a. Confirm directly with bank b. Trace to cash disbursements journal c. Ascertain reason for unusual delay d. Trace items on the bank reconciliation to cutoff bank statementsarrow_forward
- Which of the following audit procedures is aimed most directly at testing the completeness assertion for accounts payable? Footing the list of accounts payable. Tracing shipping reports after year-end to related customer purchase orders and invoices. Examining underlying documentation for cash disbursements in the period after year-end. Tracing shipping reports issued on or before year-end to related customer purchase orders and invoices.arrow_forwardAttached is an audit working paper prepared by a new staff auditor based on his testing of a client's bank reconciliation. REQUIRED: Indicate the deficiencies in the working paper prepared by the auditor for the client's bank reconciliation. Be specific with your answers.arrow_forwardWhich of the following procedures would provide the most reliable audit evidence?a. Inquiries of the client’s internal audit staff.b. Inspection of prenumbered client purchase orders filed in the vouchers payable department.c. Inspection of vendor sales invoices received from client personnel.d. Inspection of bank statements obtained directly from the client’s financial institution.arrow_forward
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