1. Why are liability accounts included in the capital acquisition and repayment cycle audited differently from accounts payable? 2. Which internal controls should the auditor be most concerned about in the audit of notes payable? Explain the importance of each.
In your audit of Aviary Industries for calendar year 2019, you found a number of matters that you believe represent possible adjustments to the company’s books. These matters are described below. Management’s attitude is that “once the books are closed, they’re closed,” and management does not want to make any adjustments. Planning materiality for the […]
E-Antiques, Inc., is an Internet-based market for buyers and sellers of antique furniture and jewelry. The company allows sellers of antique items to list descriptions of those items on the E-Antiques website. Interested buyers review the website for antique items and then enter into negotiations directly with the seller for purchase. E-Antiques receives a commission […]
1. Distinguish between the evaluation of the adequacy of insurance coverage and the verification of prepaid insurance. Explain which is more important in a typical audit. 2. In verifying accounts payable, it is common to restrict the audit sample to a small portion of the population items, whereas in auditing accrued property taxes, it is […]
Distinction Between Vendors’ Invoices and Vendors’ Statements Distinguish the reliability of vendors’ invoices, vendors’ statements, and confirmationsof accounts payable as audit evidence.
1. Distinguish between the evaluation of the adequacy of insurance coverage and the veri- fication of prepaid insurance. Explain which is more important in a typical audit. 2. In verifying accounts payable, it is common to restrict the audit sample to a small portion of the population items, whereas in auditing accrued property taxes, it […]
The following auditing procedures were performed in the audit of accounts payable: 1. Obtain a list of accounts payable. Re-add and compare with the general ledger. 2. Trace from the general ledger trial balance and supporting documentation to deter- mine whether accounts payable, related parties, and other related assets and liabilities are properly included in […]
Design and Perform Substantive Analytical Procedures (Phase III) Design and perform substantive analytical procedures for accounts payable.
AUDIT OF THE ACQUISITION AND PAYMENT CYCLE: TESTS OF CONTROLS, SUBSTANTIVE TESTS OF TRANSACTIONS, AND ACCOUNTS PAYABLE Identify the accounts and the classes of transactions in the acquisition and paymentcycle.Describe the business functions and the related documents and records in theacquisition and payment cycle.Understand internal control, and design and perform tests of controls and substantivetests […]
The following questions concern the overall audit strategy and audit program, including selection of the type of test to perform. Choose the best response. a. In the financial statement audit of a nonpublic company, the auditor decides to per- form tests of the controls related to the occurrence of sales transactions. Which of the following […]
