audit-assignment3

Auditing Assignment 3

1155067693 WANG, Haibei

1. Duplicate sales invoices-internal

2. Subsidiary accounts receivable records-internal

3. Vendors’ invoices-external

4. General ledgers-internal

5. Title insurance (房产权保险) policies for real

estate-external

6. Notes receivable-internal

7. Bank statements-external

8. Cancelled payroll checks-external

9. Cancelled notes payable-external

10. Payroll time cards-internal 11. Purchase requisitions (请购单)-internal

12. Articles of incorporation-internal

13. Receiving reports (documents prepared when

merchandise is received)-internal

14. Minutes of the board of directors-internal

15. Signed W-4s (Employee’s Withholding Exemption

Certificates)-external

16. Remittance advices (汇款单)-external

17. Signed lease agreements-external

18. Duplicate copies of bills of trading-internal

1. Review the AR with the credit manager to evaluate their collectability.-inquiries of the client

2. Compare a duplicate sales invoice with the sales journal for customer name and account. -reperformance

3. Add the sales journal entries to determine whether they were correctly totaled. -recalculation

4. Count inventory items and record the amount in the audit files.-physical examination

5. Obtain a letter from the client’s attorney addressed to CPA firm stating that heisn’t aware of anylawsuits.-confirmation

6. Extend the cost of inventory times the quantity on an inventory listing to test whether it is accurate.-recalculation

7. Obtain a letter from an insurance company to CPA firm stating the amount of fire insurance coverage.-confirmation

8. Examine an insurance policy stating the amount of the fire insurance coverage on buildings.-inspection

9. Calculate the ratio of COGS to sales as a test.-analytical procedures

10. Obtain info. about internal control by requesting the client to fill out a questionnaire.-inquiries of the client

11. Trace the total in the cash disbursements journal to the general ledger.-reperformance

12. Watch employees count inventory to determine whether company procedures are being followed.-observation

13. Examine a piece of equipment to make sure that a major acquisition was actually received.- physical examination

14. Calculate the ratio of sales commission expense to sales as a test of sales commissions.-analytical procedures

15. Examine corp. minutes to determine the authorization of the issue of bonds.-inspection

16. Obtain a letter from mgt stating that there are no unrecorded liabilities.-inquiries of the client

17. Review the total of repairs and maintenance for each month to determine whether any month’s total was unusually

large.- analytical procedures

18. Obtain a written stmt from a bank stating that the client has $15672 on deposit.-confirmation

1. The client lacks working capital to continue operations.-AAR

2. The client fails to detect employee theft of inventory.-CR

3. The company is publicly traded.-AAR

4. The auditor has identified numerous material misstmts during prior yr audit engagements.-IR

5. The assigned staff on the audit engagement lack necessary skills to identify actual errors in an account balance when

examining audit evidence accumulated.-PDR

6. The client is one of the industry’s largest based on size and mkt share.-AAR

7. The client engages in several material transactions with entities owned by family members of several client’s senior

executives.-IR

8. The allowance for doubtful accounts is based on significant assumptions made by mgt.-IR

9. The audit program omits several necessary audit procedures.-PDR

10. The client fails to reconcile bank accounts to recorded cash balances.-CR