substantive tests Archives

What should the auditor consider when engaging a specialist to perform substantive tests related to fair value assertions?

Posted on February 24, 2023 by Assessments

The amount of subjectivity involved in establishing fair value estimates can be complex for management responsible for making the fair value measurements and disclosures contained in financial statements. This is particularly true for fair value measurements for which observable market prices are not available. Auditingstandards require auditors to obtain sufficient appropriate audit evidence to provide […]

List two types of restrictions long-term creditors often put on companies when granting them a loan. How can the auditor find out about these restrictions?

Posted on February 22, 2023 by Assessments

List four examples of interest-bearing liability accounts commonly found in balance sheets. What characteristics do these liabilities have in common? How do they differ? 22-2 (OBJECTIVE 22-2) It is common practice to audit the balance in notes payable in conjunction with the audit of interest expense and interest payable. Explain the advantages of this approach. […]

Design and perform tests of controls, substantive tests of transactions, and tests of details of balances for capital stock and retained earnings.

Posted on February 22, 2023 by Assessments

Audit of Capital Stock and Paid-In Capital Design and perform tests of controls, substantive tests of transactions, and tests ofdetails of balances for capital stock and retained earnings.

Why is the monthly reconciliation of bank accounts by an independent person an important internal control over cash balances? Which individuals will generally not be considered independent for this responsibility?

Posted on February 21, 2023 by Assessments

1. Explain the relationships among the initial assessed control risk, tests of controls and substantive tests of transactions for cash disbursements, and the tests of details of cash balances. Give one example in which the conclusions reached about internal controls in cash disbursements will affect the tests of cash balances. 2. Why is the monthly […]

Explain the differences among C3, C2, and C1. Explain the circumstances under which it would be a good decision to obtain audit assurance from substantive tests at point C 1. Do the same for points C2 and C3.

Posted on February 11, 2023 by Assessments

1. What are the five types of tests auditors use to determine whether financial statements are fairly stated? Identify which tests are performed to reduce control risk and which tests are performed to reduce planned detection risk. 2. In Figure 13-4, explain the differences among C3, C2, and C1. Explain the circumstances under which it […]

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What should the auditor consider when engaging a specialist to perform substantive tests related to fair value assertions?

List two types of restrictions long-term creditors often put on companies when granting them a loan. How can the auditor find out about these restrictions?

Design and perform tests of controls, substantive tests of transactions, and tests of details of balances for capital stock and retained earnings.

Why is the monthly reconciliation of bank accounts by an independent person an important internal control over cash balances? Which individuals will generally not be considered independent for this responsibility?

Explain the differences among C3, C2, and C1. Explain the circumstances under which it would be a good decision to obtain audit assurance from substantive tests at point C 1. Do the same for points C2 and C3.