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AUD Supplemental Flashcards > Substantive Procedures > Flashcards

Substantive Procedures Flashcards

Illustrative Assertions

1
Q

PP&E-Reconcile subsidiary ledgers to control accounts.

A

Completeness, Accuracy

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2
Q

PP&E-Verify legal ownership.

A

Rights and obligations

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3
Q

PP&E-Verify additions.

A

Valuation

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4
Q

PP&E-Verify disposals.

A

Valuation

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5
Q

PP&E-Review scrap sales for unrecorded disposals.

A

Valuation

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6
Q

PP&E-Recalculate gains and losses.

A

Valuation, Accuracy

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7
Q

PP&E-Make physical inspections of additions.

A

Existence, Completeness

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8
Q

PP&E-Perform analysis of repairs and maintenance.

A

Completeness

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9
Q

PP&E-Recalculate depreciation and depletion.

A

Valuation

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10
Q

PP&E-Perform analytical review.

A

Valuation

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11
Q

PP&E-Review lease agreements.

A

Rights and obligations–disclosure

Accuracy and valuation–disclosure

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12
Q

PP&E-Determine financial statement presentation (major classes, depreciation methods, basis of valuation, estimated lines restrictions, leases).

A

Completeness

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13
Q

Cash-Test cash transactions as follows:
a. Foot cash journals.
b. Trace postings to ledger accounts.
c. Agree details of bank deposits to client records.
d. Reconcile bank activity for one or two months with cash account activity.
e. Verify cash transactions in one or more
expense accounts.

A

Accuracy, Occurrence, Completeness

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14
Q

Cash-Count all cash on hand with custodian present.

A

Existence

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15
Q

Cash-Verify cutoff of cash receipts and cash disbursements.

A

Cutoff

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16
Q

Cash-Confirm amounts on deposit with banks

A

Existence, Rights and obligations, Completeness, Valuation

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17
Q

Cash-Prepare four‐column bank reconciliation as follows:

a. Trace checks to cash disbursement.
b. Account for all checks.
c. Review deposits.
d. Review outstanding checks beginning and end.
e. Investigate NSF checks and other unusual items.

A

Completeness, Occurrence, Cutoff

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18
Q

Cash-Obtain bank cutoff statements 10 to 15 days after year‐end.

A

Existence

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19
Q

Cash-Trace all bank transfers—be alert for kiting.*

A

Valuation

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20
Q

Cash-Determine balance sheet presentation (restrictions, cash in foreign or closed
banks).

A

Valuation‐disclosures

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21
Q

Marketable Securities & Investment Revenue-Examine securities on hand with custodian present (simultaneously with cash, compare serial numbers with records).

A

Existence

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22
Q

Marketable Securities and Investment Revenue-Confirm securities in possession of others.

A

Existence, Rights and obligations, Completeness

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23
Q

Marketable Securities and Investment Revenue-Verify purchases and sales of securities
during the year.

A

Occurrence

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24
Q

Marketable Securities and Investment Revenue-Perform cutoff review.

A

Cutoff

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25
Q

Marketable Securities and Investment Revenue-Verify gain or loss on security transactions.

A

Occurrence, Accuracy, Valuation

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26
Q

Marketable Securities and Investment Revenue-Recalculate dividend and interest income.

A

Valuation

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27
Q

Marketable Securities and Investment Revenue-Determine proper accounting methods.

A

Valuation, Classification

28
Q

Marketable Securities and Investment Revenue-Investigate investments in related parties.

A

Completeness—disclosure

29
Q

Marketable Securities and Investment Revenue-Determine market value.

A

Valuation

30
Q

Marketable Securities and Investment Revenue-Determine financial statement presentation (at fair value, pledged).

A

Valuation—disclosure, Classification—disclosure

31
Q

A/R & Revenues-Test revenue and receivables transactions as follows:

a. Examine a sample of sales transactions.
b. Compare a sample of sales invoices and shipping documents.
c. Test a sample of sales invoices for clerical accuracy.
d. Examine a sample of credit memoranda.
e. Examine a sample of cash discounts.
f. Vouch a sample of cash register tapes and sales invoices to the sales journal.
g. Foot the sales journal.
h. Trace a sample of postings from the sales journal to the accounts receivable ledger.

A

Accuracy, Rights and obligations, Occurrence, Completeness

32
Q

A/R & Revenues-Prepare aging of accounts receivable.

A

Valuation, Occurrence

33
Q

A/R & Revenues-Review adequacy of allowance for bad debts and bad debt expense.

A

Valuation

34
Q

A/R & Revenues-Reconcile subsidiary ledger to control accounts.

A

Completeness, Accuracy, Existence

35
Q

A/R & Revenues-Confirm accounts receivable—positive and negative.

A

Existence, Rights and obligations, Completeness, Valuation

36
Q

A/R & Revenues-Review collections subsequent to year‐end.

A

Existence, Valuation

37
Q

A/R & Revenues-Perform cutoff review—vouch sales transactions before and after year‐end and examine sales returns.

A

Cutoff

38
Q

A/R & Revenues-Review receivables from related parties.

A

Completeness—disclosure

39
Q

A/R & Revenues-Inquire as to restrictions.

A

Completeness—disclosure

40
Q

A/R & Revenues-Review write‐offs of accounts receivable.

A

Valuation

41
Q

A/R & Revenues-Perform analytical review—gross profit.

A

Valuation

42
Q

A/R & Revenues-Determine financial statement presentation (current, nontrade, pledged, or assigned, repaid loans to insiders, installment).

A

Completeness and Accuracy—disclosure, Classification—disclosure

43
Q

Notes Receivable & Interest Income-Perform account analysis.

A

Valuation

44
Q

Notes Receivable & Interest Income-Confirm notes receivable.

A

Existence, Rights and obligations, Valuation

45
Q

Notes Receivable & Interest Income-Inspect notes.

A

Existence, Rights and obligations, Valuation

46
Q

Notes Receivable & Interest Income-Evaluate collectability.

A

Valuation

47
Q

Notes Receivable & Interest Income-Review subsequent collections.

A

Existence, Valuation

48
Q

Notes Receivable & Interest Income-Inquire as to discounted notes and other restrictions leading to contingent liabilities.

A

Completeness—disclosure

49
Q

Notes Receivable & Interest Income-Recalculate interest income.

A

Valuation

50
Q

Notes Receivable & Interest Income-Determine financial statement presentation (restrictions, insiders, contingent liabilities).

A

Completeness and Accuracy—disclosure

51
Q

Inventories and Cost of Goods Sold-Test a sample of transactions as follows:

a. Compare a sample of purchase requisitions, purchase orders, receiving reports, and vendors’ invoices.
b. Test and evaluate cost accounting system.

A

Completeness, Rights and obligations, Valuation and allocation

52
Q

Inventories and Cost of Goods Sold-Participate in planning of physical inventory.

A

Existence

53
Q

Inventories and Cost of Goods Sold-Observe the taking of physical inventory as follows:
a. Make test counts.
b. Trace test counts to inventory sheets.
c. Trace test counts to perpetual inventory records.
d. Verify all inventory tagged.
e. Test clerical accuracy of inventory
sheets and perpetual records.

A

Existence

54
Q

Inventories and Cost of Goods Sold-Review cutoff receiving reports and invoices, look for F.O.B. shipping point.

A

Completeness, Cutoff

55
Q

Inventories and Cost of Goods Sold-Determine quality and condition.

A

Valuation

56
Q

Inventories and Cost of Goods Sold-Inquire about goods held on consignment.

A

Rights and obligations

57
Q

Inventories and Cost of Goods Sold-Confirm goods held in public warehouses.

A

Completeness

58
Q

Inventories and Cost of Goods Sold-Review basis and methods for inventory pricing.

A

Valuation

59
Q

Inventories and Cost of Goods Sold-Review analysis of cost of sales.

A

Valuation

60
Q

Inventories and Cost of Goods Sold-Determine financial statement presentation (classification, pledged).

A

Rights and obligations—disclosure, Completeness—disclosure, Understandability—disclosure, Accuracy and valuation—disclosure

61
Q

Long‐Term Investments-Verify all transactions by reference to authorization and documentary evidence.

A

Existence, Occurrence, Accuracy

62
Q

Inspect and count securities and records.

A

Existence, Completeness and valuation

63
Q

Confirm securities with independent custodian.

A

Existence, Rights and obligations, Completeness

64
Q

Obtain evidence for carrying value and earnings therefrom:
a. Obtain audited statements, if available.
b. If audited statements are not available, extend unit tests depending on materiality of investment. May rely on investee’s auditor.
c. Use market quotations when based on broad and active market.
d. Use personal valuations only if available and reasonable.
e. If collateral is important with regard to collectability, ascertain existence,
market value, and transferability.

A

Valuation

65
Q

Inquire of management with regard to status of long‐term investments.*

A

Rights and obligations, Valuation

66
Q

Verify income related to investments.

A

Valuation

67
Q

Determine financial statement presentation (cost or equity methods).

A

Valuation—disclosure, Classification—disclosure

AUD Supplemental Flashcards (1 decks)

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