Matching Auditing Procedures to Specific Assertions

Question 1

Completeness

Answer 1

1) Tracing forward from Source Documents > accounting recognition > Financial Statements
2) Analytical Review
3) Observation - of process and procedures

Question 2

Cutoff

Answer 2

1) Cutoff procedures - to analyze transactions before and after year end for proper accounting period recognition

Question 3

Valuation/Allocation/Accuracy

Answer 3

1) Inspection of documents
2) Footing and cross footing schedules
3) Independent Recalculation - Aging schedule or estimated made by management

Question 4

Existence and Occurance

Answer 4

1) Vouching from F/S back to supporting documents
2) Confirmation - accounts with 3rd parties
3) Observation/Inspection & Examination - of assets, process and procedures (persuasive evidence)

Question 5

Rights and Obligations

Answer 5

1) Inspection of documentation supporting transactions

Question 6

Understandability

Answer 6

1) Inspection of documents supporting transactions
2) Review of all related disclosures for compliance with GAAP
3) Inquiry of Management - disclosures for account & related accounts