According to the text, to minimize the risk of material misstatement, auditors seek third- party verification of account balances by mailing customers their statements. Discuss the advantages of positive and negative confirmations, and ascertain whether or not email and oral confirmations are acceptable to increase customer response rates. Support your position.
- Discuss the difference between substantive test of transactions and substantive test of balances, and identify at least two (2) situations when an auditor should test account balances. Support your rationale with related examples of such circumstances
- Create a scenario that demonstrates specific ways in which management could manipulate transactions impacting inventory values that the auditing team might not detect. Recommend key strategies that the auditor could implement in anticipation of such manipulation. Justify your response.
- Discuss the difference between a subsequent event and a subsequent discovery of facts, and determine the auditor's responsibility for each event after the audit report is complete. Support your position.