In: Accounting
For each audit activity, identify the audit procedure. Each activity has one answer, but the audit procedures can be used more than once.
__ Review lease agreements for capital leases.
__ Select a sample of inventory items from the receiving reports and follow the items to inventory records.
__ Select a sample of fixed asset additions and ask to see the assets.
__ Review the client's calculation of the allowance for doubtful accounts.
__ Compare sales invoice quantities to shipment documentation quantities to verify the client's assertion that this procedure is done by client personnel.
__ Select a sample of entries in the payroll journal and match the employee name, date of payment, and amount of pay to the employee personnel file.
__ Ask production and sales personnel concerning possible obsolete or slow-moving inventory.
__ Watch that an independent person double-checks the payroll wage rates and calculations before checks are printed.
__ Calculate the percentage of sales for salary and wages expense for this year and the prior year for reasonable presentation.
__ Send a form to the bank for the balances of the payroll checking accounts.
Answer Bank
A. |
Vouching |
B. |
Tracing |
C. |
Scanning |
D. |
Observation |
E. |
Confirmation |
F. |
Inspection of assets |
G. |
Inquiry |
H. |
Analytical Procedures |
I. |
Recalculation |
J. |
Reperformance |
___Review lease agreements for capital leases. | Scanning C |
__ Select a sample of inventory items from the receiving reports and follow the items to inventory records. | Tracing B |
__ Select a sample of fixed asset additions and ask to see the assets. | Inspection of assets F |
__ Review the client's calculation of the allowance for doubtful accounts. | Recalculation I |
__ Compare sales invoice quantities to shipment documentation quantities to verify the client's assertion that this procedure is done by client personnel. | Reperformance J |
__ Select a sample of entries in the payroll journal and match the employee name, date of payment, and amount of pay to the employee personnel file. | Vouching A |
__ Ask production and sales personnel concerning possible obsolete or slow-moving inventory. | Inquiry G |
__ Watch that an independent person double-checks the payroll wage rates and calculations before checks are printed. | Observation D |
__ Calculate the percentage of sales for salary and wages expense for this year and the prior year for reasonable presentation. | Analytical Procedures H |
__ Send a form to the bank for the balances of the payroll checking accounts. | Confirmation E |
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