For each of the following Specific Audit Procedures (A through F) state the General Audit Assertion...

For each of the following Specific Audit Procedures (A through F) state the General Audit Assertion along with the Type of Assertion (Transaction, Balance, Presentation & Disclosure) and Explain the Specific Audit Assertion associated with the audit procedure. Be sure to specify the type, i.e. whether it is a transaction-related, balance-related or presentation and disclosure-related audit assertion. State only one assertion for each audit procedure, if you state multiple assertions for each procedure zero marks will be awarded. Organize your answer in two columns as follows: General Audit assertion AND Type (2 mark each) Explain the Specific Audit Assertion associated with the procedure (1 mark each) A. Add all supplier balances in the accounts payable master file and agree the totals to the “Accounts payable – trade” balance in the general ledger. B. For a sample of receiving documents from receipts for the last three days of the current year end and the first three days of the new fiscal year, trace to the supplier invoice and verify that the account payable was set up in the correct fiscal year. C. Multiply quantity on hand times unit price for items in inventory and compare the total to the inventory on hand calculated by the client for each item. Trace the total amount on the inventory listing to the general ledger inventory amount. D. Read the notes to the financial statements regarding long term debt and financial instruments and verify that they clearly describe the nature of the debt instruments that are included in the financial statements. E. Inquire of the client whether any inventory has been sold on consignment. F. Assess the bad debt expense allowance: compare bad debt as a percentage of sales to prior years. Examine the accounts receivable trial balance for old accounts and determine whether these accounts have been allowed for.

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Audit Procedure	General Audit Assertion	Type of assertion	Specific Audit Assertion associated with the audit procedure
A. Add all supplier balances in the accounts payable master file and agree the totals to the “Accounts payable – trade” balance in the general ledger.	Valuation	A/c Balance	Balance amount mentioned against the accounts payable heading in the balance sheet, represent the true values of all the supplier-accounts adding to it.

B. For a sample of receiving documents from receipts for the last three days of the current year end and the first three days of the new fiscal year, trace to the supplier invoice and verify that the account payable was set up in the correct fiscal year.	Cut-off	Transaction	The assertion is that the transaction with the supplier that happened were recorded in the correct reporting period

C. Multiply quantity on hand times unit price for items in inventory and compare the total to the inventory on hand calculated by the client for each item. Trace the total amount on the inventory listing to the general ledger inventory amount.	Accuracy	Presentation & disclosure	Balance amount mentioned against the inventory heading in the balance sheet, represent the true additive values of all inventory at hand .

D. Read the notes to the financial statements regarding long term debt and financial instruments and verify that they clearly describe the nature of the debt instruments that are included in the financial statements.	Proper classification/understantability	Presentation & disclosure	The assertion is they are appropriately presented so as to understand in the same manner as intended.

E. Inquire of the client whether any inventory has been sold on consignment.	Occurrence	Transaction	To confirm that the sale -on consignment actually took place.

F. Assess the bad debt expense allowance: compare bad debt as a percentage of sales to prior years. Examine the accounts receivable trial balance for old accounts and determine whether these accounts have been allowed for.	Valuation	A/c Balance	Balance amount mentioned against the accounts receivable heading in the balance sheet, represent the true realisable value by checking whether right amount of allowances had been made----procedure relates to both receivables asset & provisions liability

ekkarill92 answered 1 year ago

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