1. Several audit objectives are listed below. For each item, identify the related assertion and a specific audit procedure that can be applied to accomplish the objective.
(a) Establish whether recorded amounts due from customers are valid.
(b) Determine whether leases are properly recorded as capital or operating leases.
(c) Assess the adequate inclusion of related party transactions.
(d) Determine that year-end inventory quantities are actually on hand.
(e) Determine whether prices used in the client’s billing program are authorized.
(f) Determine whether payroll is properly accrued at year end.
(g) Verify whether all cash collections are included in bank deposits.
(h) Determine whether the general ledger includes any unusual adjusting entries.
Hooks, Karen L. Auditing and Assurance Services: Understanding the Integrated Audit, 1st Edition. Wiley, 03/2010. VitalBook file.
2. Classify each of the following based on whether they can be performed at an interim date (assuming appropriate procedures are performed during the roll forward period) or whether they must be performed at or after the fiscal year end. Briefly justify your answer. State why for each. (a) Control tests of the client’s year-end closing and financial reporting process (b) Observations and tests of the client’s count of physical inventory (c) Substantive tests of accounts receivable amounts (d) Audit of cash (e) Design effectiveness evaluation of ICFR (f) Operating effectiveness evaluation of ICFR
(Hooks 272-273) Hooks, Karen L. Auditing and Assurance Services: Understanding the Integrated Audit, 1st Edition. Wiley, 03/2010. VitalBook file. The citation provided is a guideline. Please check each citation for accuracy before use.