Exam 11: Auditing Inventory, Goods and Services, and Accounts Payable: the Acquisition and Payment Cycle

The auditor may test a manufacturing client's cost system to substantiate the valuation of inventory.

Which of the following is NOT a element of internal controls for inventory?

Generally accepted auditing standards (GAAS) require the auditor to observe the taking of the physical inventory at year-end.

The auditor tests significant repairs and maintenance expenses to ensure that an item that should be capitalized has not been expensed.

Which of the following is a procedure used in an audit where there is a heightened risk of fraud related to accounts payable and other related expense accounts?

A new vendor should be added to an authorized vendor database by an individual in the purchasing department.

Which of the following might an auditor do in testing for the existence of accounts payable?

Which of the following is not a standard procedure that the auditor normally should follow in the observation of inventory at year-end?

Supply chain management has helped many companies improve the efficiency of operations.

When auditing accounts payable, the auditor would most likely review a sample of cash disbursements throughout the year end to determine whether disbursements for goods and services are applicable to the subsequent year.

Which of the following is an example of the type of analytics that an auditor would use for inventory?

Which of the following procedures will usually be performed by the auditor to determine if obsolete inventory exists?

The internal control that requires that "checks are pre-numbered and accounted for" satisfies which assertion?

Which of the following would the auditor most likely do when testing the valuation assertion for inventory?

Testing cash disbursements subsequent to the year under audit allows the auditor to determine certain payables that may not have been recorded previously.

Sources of information regarding a client's inventory obsolescence can be partially noted during the inventory observation.

Reconciliation of vendor statements to recorded payables provides assurance related to the completeness assertion.

Management may intentionally misstate inventory balances by overvaluing items that are obsolete.

It is likely in the acquisition and payment cycle that audit evidence from substantive analytical procedures alone will be sufficient enough for the auditor.

Bar code scanning may best be utilized in the receiving process to accomplish which of the following?