Question

For each number from 1 to 10 below here, please indicate the correct assertion being tested and type of audit evidence!

1) The depreciation period of the building has been recorded and count correctly

2) The vehicle in the statement of financial position do indeed belong to the company

3) Long-lived asset that are used as collateral for debt must be disclosed in the notes to the financial statements

4) Plantation Land of branch offices which are located in remote place indeed really exist

5) The inventory purchases transaction really happened, and the purchase order is checked

6) The company depreciated equipment using the straight-line method and auditor has calculate the depreciation expense, no material different found.

7) Inventories that are consignment from supplier are not included in the company's assets

8) The company's plant and equipment properties have been valued using fair value and client include proof of appraiser's assessment

9) All the sales discount and sales return has been recorded, auditor checked the sales return and discount report

10) All the account receivable in the statement of financial position is on correct amount, auditor has contacted client customer directly by phone

Answer 1

Answer :

1.

Assertion : Valuation , Cut-off

Type of Audit Evidence :(1). Recalculate Depreciation Schedule. (2). Reconcile Depreciation Schedule with General Ledger. (3). Recalculate Accumulated Depreciation to ensure Depreciation is Counted Correctly and Performing Cut-off Procedure such as Analytical Procedure to ensure Correct Accounting Period.

2.

Assertion : Right and Obligation.

Type of Audit Evidence : Inspect Invoice , Title Documents to Confirm Ownership of Vehicle.

3.

Assertion : Understandability and Classification.

Type of Audit Evidence : Examine Notes to Accounts Disclosures to ensure Appropriate Disclosure has been made regarding Long-lived Assets are used as collateral for Debt.

4.

Assertion : Existence.

Type of Audit Evidence : (1). Asset Inspection and Observation. (2). Inquiries during Land Tour if possible. (3). Inspect insurance and tax documents.

5.

Assertion : Existence.

Type of Audit Evidence : (1). Observe Inventory Counts. (2). Confirmation for Inventories at location outside the entity. (3). Inspect from Inventory Summary Report and Client's Count of Physical Inventory.

6.

Assertion : Valuation.

Type of Audit Evidence : Re-Calculation of Depreciation Schedule and Reconcile it with General Ledger.

7.

Assertion : Right and Obligation.

Type of Audit Evidence : (1). Confirmation from Consignor regarding Consignment. (2). Inspect Performa Invoice sent by Consignor Stating Details of Good Sent. (3). Inspect Accounts Sales Prepared by Client ( Consignee ) stating Record of Sale of goods Received on Consignment.

8.

Assertion : Valuation.

Type of Audit Evidence : (1). Review Appraiser's Assessment and (2). Recalculate Fair value to ensure Arithmetic Accuracy.

9.

Assertion : Completeness.

Type of Audit Evidence : (1). Reconcile with Inventory Outward Register to ensure all sale Return recorded. and (2). Inspect the Discount term and Reconcile with Cash Receipts to ensure all sale discount accounted for by the company.

10.

Assertion : Valuation.

Type of Audit Evidence : (1). Subsequent Collection and (2). Reperform / Inspect Accounts Receivable Ageing (Process of Re-evaluating Collectibility on basis on time duration ). to determine allowance for uncollectible is reasonable.