Classification

7-36 (Classification and Reliability of Audit Evidence) Following are examples of documentation typically obtained by auditors. Required For each example: a. Classify the documentation as internal or external evidence. b. Classify the documentation as to its relative reliability (high, moderate, or low). c. Identify an account balance and assertion for which the auditor might use the documentation. Documentary Evidence Used in an Audit 1. Vendor invoices 2. Vendor monthly statements 3. Sales invoices 4. Shipping documents for sales 5. Bank statements 6. Employee payroll time cards 7. Receiving reports for goods received from vendors 8. Sales contracts 9. Purchase commitm... click for more

Audit tests

What are the two types of audit tests? What are some examples of each of these two types of tests? How will the auditor use the data gathered from these tests?

Key elements

Why do auditors have to consider the internal controls of the organization? What are some key elements of internal control? Which are the most important? How will the auditor have to modify the audit program if the internal controls are deemed inadequate to support management assertions?

Mgmt assertions

What are management assertions? How do they affect the financial statements? How does the auditor formulate audit objectives based on management assertions?

Internal Controls—Office Service Client

5-61 (Internal Controls—Office Service Client) Brown Company provides the following office support services for more than 100 small clients: 1. Supplying temporary personnel 2. Providing monthly bookkeeping services 3. Designing and printing small brochures 4. Copying and reproduction services 5. Preparing tax reports Some clients pay for these services on a cash basis, some use 30-day charge accounts, and others operate on a contractual basis with quarterly payments. Brown’s new office manager was concerned about the effectiveness of control procedures over sales and cash flow. At the manager’s request, the process was reviewed and the following facts were disclosed: a. Contrac... click for more