Aud 4 Sims

Question 1

What is an additional procedure that you can perform if the confirmations for A/R do not work?

Answer 1

Perform tests of subsequent cash receipts AFTER the Balance Sheet Date

Question 2

What is a good procedure to determine the understandability and classification of A/R?

Answer 2

Review the A/R balance for amounts due from officers and employees (proves that they are in the write A/R account)

Question 3

How do you test for every account in the year end bank reconciliation?

Answer 3

1. footing the bank rec and the list of outstanding checks
2. agreeing the balance per the books to the general ledger
3. Agreeing the balance per the bank confirmation to the balance per the bank on the bank reconciliation
4. Agreeing deposits in transit and outstanding checks to the cutoff bank statement. Cutoff statement is obtained from the bank and covers the first 10 to 15 days after year end. Investigate all unclear items.

Question 4

What assertion would testing shipping and receiving cutoff procedures for inventory hit?

Answer 4

Completeness and possible Rights and Obligations

Question 5

What are two inventory procedures that will help you understand the Valuation Assertion?

Answer 5

Examining an analysis of Inventory Turnover

Examining paid vendor invoices

Question 6

What kind of adjusting journal entry would you have to make if a major customer filed for bankruptcy during the year? (Think A/R)

Answer 6

DR: Operating Expense
CR: AFDA

Question 7

What type of audit procedure is done when you read a company’s handbook on inventory for the count?

Answer 7

Inspection

Question 8

What type of audit procedure is done when you are CHECKING THE ACCURACY of a form or file?

Answer 8

Recalculation

Question 9

What type of audit procedure is done when you independently recreate a document like A/R Aging Balance?

Answer 9

Reperformance

Question 10

What type of audit procedure is done when you are scanning the repairs and maintenance account for Fixed Assets?

Answer 10

Analytical