1. List five tests of controls that can be performed for the payroll and personnel cycle and state the purpose of each control tested. 2. Explain the circumstances under which an auditor should perform audit tests primarily designed to uncover fraud in the payroll and personnel cycle.
As part of the audit of different audit areas, auditors should be alert for the possibility of unrecorded liabilities. For each of the following audit areas or accounts, describe a liability that can be uncovered and the audit procedures that can uncover it: a. Minutes of the board of directors meetings b. Land and buildings […]
The following types of internal controls are commonly used by organizations for property, plant, and equipment: 1. Written policies exist and are known by accounting personnel to differentiate be- tween capitalizable additions, freight, installation costs, replacements, and mainte- nance expenditures. 2. A fixed asset master file is maintained with a separate record for each fixed […]
The following questions concern internal controls in the acquisition and payment cycle. Choose the best response. a. Which of the following questions is an auditor least likely to include on an internal control questionnaire concerning the initiation and execution of equipment transactions? (1) Are requests for major repairs approved at a higher level than the […]
Identify three asset accounts, three expense accounts, and three liability accounts typically associated with acquisition and payment cycle transactions. 19-2 (OBJECTIVE 19-2) Explain the relationship between substantive tests of transactions for the acquisition and payment cycle and tests of details of balances for the verification of property, plant, and equipment. Which aspects of property, plant, […]
AUDIT OF INCOME AND EXPENSE ACCOUNTS Design and perform audit tests of income and expense accounts.
1. Explain why the emphasis in auditing property, plant, and equipment is on the current period acquisitions and disposals rather than on the balances in the account carried forward from the preceding year. 2. What is the most important balance-related audit objective for depreciation expense? What are the auditor’s primary concerns?
The following tests of controls and substantive tests of transactions audit procedures for acquisitions and cash disbursements are to be used in the audit of Ward Publishing Company. You concluded that internal control appears effective and a reduced assessed control risk is likely to be cost beneficial. Ward’s active involvement in the business, good separation […]
The Broughton Cap Company requires that prenumbered receiving reports be completed when purchased inventory items arrive in the receiving department. At the time of receipt, the receiving clerk writes the date of receipt on the receiving document. The last receipt in the fiscal year ended June 30, 2019, was recorded on receiving report 7280. The […]
In testing cash disbursements for the Jay Klein Company, you obtained an understanding of internal control. The controls are reasonably good, and no unusual audit problems arose in previous years. Although there are not many individuals in the accounting department, there is a reasonable separation of duties in the organization. There is a separate purchasing […]
