In: Accounting
For each of the procedures described in the table below, select from the list provided the audit procedure that the auditor performed. Then, indicate if the procedure was a substantive procedure or a test of controls.
Possible Audit Procedure:
1. Analytical Procedures
2. Confirmation
3. Inquiry
4. Inspection
5. Observation
6. Recalculation
7. Reperformance
Description of Procedure |
Audit Procedure Performed (1-7 from list above) |
Classification of Audit Procedure (Substantive or Test of Controls) |
1) Requested the bank to respond to the auditor with the client's account balance. | ||
2) Asked management to describe any potential or actual legal actions, the profitability of an unfavorable outcome; and the amount or range of potential los for eah legal action. | ||
3) Reviewed board of director minutes for authorization of new debt financing. | ||
4) Watched the payroll distribution on an unanounced basis. | ||
5) Computed the amount of depreciation expense based on the book value, company's policy for depreciation, and estimated economic life and agreed the amount to the financial statements. | ||
6) Selected various voucher packages that had been approved and matched the invoice, purchase order, and receiving report. | ||
7) Compared to monthly revenue data by month to comparable prior periods and investigated unusual fluctuations. |
Description of Procedure | Audit Procedure Performed | Classification of Audit Procedure |
(1-7 from list above) | (Substantive or Test of Controls) | |
1) Requested the bank to respond to the auditor with the client's account balance. | Confirmation | Substantive |
2) Asked management to describe any potential or actual legal actions, the profitability of an unfavorable outcome; and the amount or range of potential los for eah legal action. | Inquiry | Test of Control |
3) Reviewed board of director minutes for authorization of new debt financing. | Observation | Substantive |
4) Watched the payroll distribution on an unanounced basis. | Inspection | Test of Control |
5) Computed the amount of depreciation expense based on the book value, company's policy for depreciation, and estimated economic life and agreed the amount to the financial statements. | Recalculation | Substantive |
6) Selected various voucher packages that had been approved and matched the invoice, purchase order, and receiving report. | Reperformance | Substantive |
7) Compared to monthly revenue data by month to comparable prior periods and investigated unusual fluctuations. | Analytical Procedures | Substantive |