Audit Testing

Question 1

Confirming opening balance to prior year’s auditing ending balance

Answer 1

Allocation and Valuation

Question 2

Examining consignment agreements to ensure client has legal title

Answer 2

Rights and obligations

Question 3

Examine subsequent cash disbursements to determine if those disbursements should have been included in the current period

Answer 3

Completeness (account balances)

Question 4

Re-performing Math computations

Answer 4

Valuation and allocation

Question 5

Review agreements to see if entity complied with any restrictions.

Note: GAAP requires disclosure of non compliance

Answer 5

Completeness (Presentation and Disclosure

Question 6

Auditor’s Direct personal observation to corroborating management’s assertion

Answer 6

Existence

Question 7

Auditor’s Direct personal observation regarding approval of sales orders to prove they really occures

Answer 7

Occurence

Question 8

Tracing from Shipping Documents to sales invoice test all shipments have been properly recorded

Answer 8

Completeness (Transactions and events)

Question 9

Testing aging of accounts receivable

Answer 9

Valuation and Allocation

Question 10

Certain that F/S comply with GAAP requirements of classification of investments as current/noncurrent

Answer 10

Understandability and Classification