a.
Concept introduction:
To indicate: Type of audit procedure insending a written request to the client's customers requesting that they report the amount owed to the client represents.
a.
Answer to Problem 5.32P
Confirmation.
Explanation of Solution
Type of audit procedure in Sending a written request to the client's customers requesting that they report the amount owed to the client represents is confirmation. Confirmation can be internal confirmation and external confirmation. An external confirmation represents audit evidence obtained by auditor as a direct response from a third party.
b.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of auditprocedure in examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period represents.
b.
Answer to Problem 5.32P
Inspection of records or documents.
Explanation of Solution
Type of audit Examining large sales invoices for a period of two days before and after year-end to determine if sales are recorded in the proper period represents is Inspection of records or documents. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
c.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account represents.
c.
Answer to Problem 5.32P
Inspection of records or documents and reperformance.
Explanation of Solution
Type of audit procedures in agreeing the total of the accounts receivable subsidiary ledger to the accounts receivable general ledger account represents is inspection of records or documents and representation. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
d.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in discussing the adequacy of the allowance for doubtful accounts with the credit manager represents.
d.
Answer to Problem 5.32P
Inquiry.
Explanation of Solution
Type of audit procedures in discussing the adequacy of the allowance for doubtful accounts with the credit manager represents is Inquiry. Inquiry consist of seeking information of knowledgeable person within the entity or outside of the entity. Inquiry is used throughout the audit in addition to other audit procedure.
e.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in comparing the current-year gross profit percentage with the gross profit percentage for the last four yearsrepresents.
e.
Answer to Problem 5.32P
Analytical procedure.
Explanation of Solution
Type of audit procedures in comparing the current-year gross profit percentage with the gross profit percentage for the last four years represents is Analytical procedures. Analytical procedures consist of evaluation of financial information made by a study or financial and non-financial data.
f.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in examining a new plastic extrusion machine to ensure that this major acquisition was received represents.
f.
Answer to Problem 5.32P
Inspection of tangible asset.
Explanation of Solution
Type of audit procedures in examining a new plastic extrusion machine to ensure that this major acquisition was received represents is Inspection of tangible data. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
g.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in watching the client's warehouse personnel count the raw materials inventory represents.
g.
Answer to Problem 5.32P
Observation.
Explanation of Solution
Type of audit procedures in watching the client's warehouse personnel count the raw materials inventory represents is observation. Observation consists of looking at a process or procedure performed by others.
h.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in performing test counts of the warehouse personnel's count of the raw materialrepresents.
h.
Answer to Problem 5.32P
Reperforming.
Explanation of Solution
Type of audit procedures in performing test counts of the warehouse personnel's count of the raw material represents is Reperforming. Reperforming involves the auditor’s independent execution of procedures or controls that were originally performed as part of the entity’s internal control.
i.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in obtaining a letter from the client's attorney indicating that there were no lawsuits in progress against the clientrepresents.
i.
Answer to Problem 5.32P
Confirmation.
Explanation of Solution
Type of audit procedures in obtaining a letter from the client's attorney indicating that there were no lawsuits in progress against the client represents is confirmation. Confirmation can be internal confirmation and external confirmation. An external confirmation represents audit evidence obtained by auditor as a direct response from a third party.
j.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures in tracing the prices used by the client's billing program for pricing sales invoices to the client's approved price listrepresents.
j.
Answer to Problem 5.32P
Inspection of records or documents and reperforming.
Explanation of Solution
Type of audit procedures in tracing the prices used by the client's billing program for pricing sales invoices to the client's approved price list represents is inspection of records or documents and representation. Inspection involves examining the records or documents, whether internal or external, in paper form or electronic form, or other media. Inspection of records and documents provides audit evidence of varying degrees of reliability.
k.
Concept introduction: Audit procedures are processes and techniques that auditors perform to obtain audit evidence.
To indicate: Type of audit procedures reviewing the general ledger for unusual
k.
Answer to Problem 5.32P
Scanning.
Explanation of Solution
Type of audit procedures reviewing the general ledger for unusual adjusting entries represents is scanning. Scanning is checking the data’s again for mistakes.
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Chapter 5 Solutions
AUDITING LL W/ CONNECT <C>
- discuss the process of auditing the followingtransactions/accounts: • Revenue Recognition• Property and Equipment• Leasesesarrow_forwardList the functions needs to be done on the part of auditor to verify contingent liabilities of an company during the process of the audit?arrow_forwardthe auditor confirms the receivable of the entity to the entity's customers: a. existence b. completeness c. cutoff d. valutationarrow_forward
- The following are two specific audit objectives in the audit of accounts payable. The list referred to is the list of accounts payable taken from the accounts payable subsidiary record. The total amount in the list agrees with the accounts payable balance in the general ledger. For the audit of accounts payable, which of these two specific audit objectives is usually more important? Group of answer choices a. Audit of existence. b. Audit of completeness.arrow_forwardA system that traces the detailed transactions relating to any item in an accounting record could be define as an audit trail. Therefore, Tracing is used primarily to test which of the following assertions about classes of transactions? Select one: a. Valuation and Allocation. b. Accuracy. c. Existence. d. Completenessarrow_forwardAn audit plan containsa. Specifications of audit standards relevant to the financial statements being audited.b. Specifications of procedures the auditors believe appropriate for the financial statementsunder audit.c. Documentation of the assertions under audit, the evidence obtained, and the conclusionsreached.d. Reconciliation of the account balances in the financial statements with the account balances in the client’s general ledger.arrow_forward
- Which of the following procedures is MOST likely to be performed before the balance sheet date? a. Determine the date of the Letter of Representations b. Make a legal determination whether fraud has occurred. c. Search for unrecorded liabilities. d. Confirmation of receivables. e. Updating the predecessor's audit report date.arrow_forwardList two examples of audit evidence the auditor can use in supportof each of the following:a. Recorded amount of entries in the acquisitions journalb. Physical existence of inventoryc. Accuracy of accounts receivabled. Ownership of fixed assetse. Liability for accounts payablef. Obsolescence of inventoryg. Existence of petty casharrow_forwardThree common types of attestation services are Select one: O a. audits of historical financial information, verifications of historical financial information, and attestations regarding internal controls. b. reviews of historical financial information, verifications of future financial information, and attestations regarding internal controls. audits of historical financial statements, reviews of historical financial statements, and audits of internal control over financial reporting. O d. audits of historical financial information, reviews of controls related to investments, and verifications of historical financial information.arrow_forward
- Which of the following audit procedures will apply to obtain the reliable audit evidence relating to the existence of tangible assets? O a. Reperformance O b. Confirmation O c. Inspection O d. Recalculationarrow_forwardName the record in which the auditor records the audit procedures performed, the relevant audit evidence was obtained and the conclusion reached. a. Audit evidence c b. Audit file x c. All options, D. Audit documentationarrow_forwardWhich of the following normally occurs earliest in the audit examination?a. Discovery of an omitted audit procedure.b. Dual dating the auditor’s report on the entity’s financial statements for subsequent events that exist at the date of the financial statements.c. Preparation of the management letter.d. Review of audit documentation.arrow_forward
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