Financial Statement Assertions

Question 1

Examing consignment agreement

Answer 1

Rights and obligations

Question 2

Examing check register for the month following year-end for disbursements relating to the current period

Answer 2

Completeness (account balances)

Question 3

Review bond indentures agreement and ascertain that the client has complied with any restrictive covenants

Answer 3

Completeness (presentation and disclosure)

Question 4

Inspect major new additions to PPE

Answer 4

Existence

Question 5

Test of aging AR

Answer 5

Allocation and evaluation

Question 6

Observe Procedures, including segregation of duties for approving SO

Answer 6

Occurrence

Question 7

Trace shipping documents to sales invoice

Answer 7

Completeness (transactions and events)

Question 8

Reperform check accuracy of vendor invoice pricing

Answer 8

Evaluation and allocation

Question 9

Trace beginning balance for inventory to prior year’s audit documents

Answer 9

Allocation and valuation

Question 10

Using a combined approach most likely would involve

Answer 10

Identifying specific internal controls relevant to specific assertions.

Question 11

In assessing the competence of internal auditor an independent auditor would least likely to obtain info from

Answer 11

the results of analytical procedures

Question 12

Which procedure auditor least likely to perform when he uses specialist

Answer 12

Refer to the auditor’s specialist in the audit report to indicate a division of responsibility