Response to the following problem:
Following are seven audit activities.
a. Examine invoices supporting recorded fixed asset additions.
b. Review industry databases to assess the risk of material misstatement in the financial statements.
c. Summarize misstatements identified during testing to assess whether the overall financial statements are fairly stated.
d. Test computerized controls over credit approval for sales transactions.
e. Send letters to customers confirming outstanding accounts receivable balances.
f. Perform analytical procedures comparing the client with similar companies in the industry to gain an understanding of the client's business and strategies.
g. Compare information on purchases invoices recorded in the acquisitions journal with information on receiving reports.
Required:
For each activity listed above, indicate in which phase of the audit the procedure was likely performed.
1. Plan and design an audit approach based on risk assessment procedures (Phase I)
2. Perform tests of controls and substantive tests of transactions (Phase II)
3. Perform analytical procedures and tests of details of balances (Phase III)
4. Complete the audit and issue an audit report (Phase IV)