Exam 9: Audit Evidence

The following are audit procedures in the sales and collection cycle. 1. Inspect a sample of shipping documents to determine if each has a sales invoice number included on it. 2. Discuss with the sales manager whether any sales allowances have been granted after the balance sheet date that may apply to the current period. 3. Add the columns on the aged trial balance and compare the total with the general ledger. 4. Observe whether the controller makes an independent comparison of the total in the general ledger with the trial balance of accounts receivable. 5. For the month of May, count the approximate number of shipping documents filed in the shipping department and compare the total with the number of sales invoices in the sales journal. 6. Compare the date on a sample of shipping documents throughout the year with related duplicate sales invoices and the accounts receivable master file. 7. Examine a sample of customer orders and see if each has a credit authorization. 8. Send letters directly to former customers whose accounts have been written off as uncollectible to determine if any have actually been paid. 9. Examine the master file of accounts receivable to see if each has an indication of "C" for a regular customer, "N" for interest-bearing receivables, and "R" for related parties. 10. Compare the date on a sample of shipping documents a few days before and after the balance sheet date with related sales journal transactions. Required: For each procedure, identify the type of evidence being used. For each procedure, identify either the transaction-related audit objective(s) being met or the balance-related audit objective(s) being met.

Audit evidence is generally considered sufficient when

The audit working papers serve as a record of the evidence accumulated and the results of the audit tests. This helps to demonstrate that the audit was

A common comparison occurs when the auditor calculates the expected balance and compares it with the actual balance. The auditor's expected account balance may be determined by

Most auditors prefer to replace external confirmation with analytical procedures whenever possible because the

With the use of electronic working papers, each team member should have a unique access identification code and a password to access the working papers. Once a working paper is completed, what type of access should the staff auditor who prepared the working paper file have?

Evidence can be obtained from others or provided by the auditor who has good knowledge of each industry but is not an expert. Which of the following types of evidence is considered to be most reliable?

A) There are four important purposes of analytical procedures. Identify each of these four purposes and for each purpose give a specific example of an analytical procedure that an auditor might perform. B) Identify each of the five major types of analytical procedures and give an example of each. C) One purpose of performing analytical procedures in the planning phase of an audit is to assess the client's financial condition. Explain how the assessment of a client's financial condition can affect the auditor's decisions concerning evidence accumulation in later phases of the audit.

Which of the following forms of evidence would be least persuasive in forming the auditor's opinion?

The working papers contain data useful for evaluating the adequacy of the audit scope and the fairness of the financial statements. This data helps the auditor to conclude whether

The Bank of New Haven relies heavily on computers to calculate the settlements of amounts due to other banks. Given that the process is highly automated, the auditor would not be able to obtain sufficient evidence with substantive procedures. The auditors of the Bank of New Haven should

Evidence is usually more persuasive for balance sheet accounts when it is obtained

When the current year's unaudited trial balance amounts are compared to the prior year's audited trial balance amounts,

Identify and define the seven methods of audit evidence collection. Which two types of evidence are the most expensive? Which three types of evidence are the least expensive? Which type of evidence would be most persuasive when testing the existence objective for long-term assets?

Which of the following types of evidence would be considered most reliable in the audit of accounts payable?

For income statement accounts, evidence is more persuasive if there is a sample from

Inspection of assets is not a sufficient form of evidence when the auditor wants to determine the

"The detailed instructions for the collection of a particular type of audit evidence" is the definition of a(n)

An example of an external document is

The auditor is tracing from the duplicate sales invoices to related shipping documents with respect to the occurrence transaction-related audit objective. This type of evidence is