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Flashcards in Audit 9 Deck (19)
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1

when you do an attest engagement on an entity's internal control - what must you get from management

They must give a written assertion about the effectiveness of the internal controls
- the report can be for general use
- the auditor does not have to rely on the I/C in an audit
- They do not have to be the auditor of the F/S

2

Possible Error: Invoices for goods are posted to incorrect customer accounts

ICP:
Monthly statmetn sare mailed to all customers with outstanding balances

3

Possible Error:
Goods ordered by customers are shipped, but not billed to anyone

ICP:
shipping documents are compared with sales invoices when goods are shipped

4

Invoices are sent for shipped goods, but not record in the sales journal

Daily summaries are compared with control totals of invoices

5

Invoices are sent for shipped goods and are recorded in the sales journal, but are not posted to any customer accounts

control amounts posted to the A/R ledger are compared with control total of invoices

6

credit sales are made to individuals with unsatisfactory credit ratings

customer orders are compared with an approved customer list

7

goods are removed from inventory for unauthorized orders

approved sales orders are required for goods to be released from the warehourse

8

Goods shipped to customers do not agree with goods ordered by customers

Shipping clerk compared goods received from the warehouse with approved sales orders.

9

Invoices are sent to allies in a fruadulent scheme and sales are recorded for ficticious transactions

Sales invoices are compared with shipping documents and approved customer orders before invoices are mailed.

10

customer checks are received for less than the customers full balance, but customers full balances are credited

Total amount posted to the A/R ledger from remittance advices are compared with the validated bank deposit slip

11

customer checks are misappropriated before being forwarded to the cashier for deposit

Monthly statements are mailed to all customers with outstanding balances

12

different customer accounts are each credited for the same cash receipt

total amounts posted to the A/R ledger from remittance advices are compared with the validated bank deposit slip

13

customer checks are properly credited to customer accounts and are properly deposited, but errors are made in recording receipts in the cash receipts journal

an employee other than the bookkeeper, periodically prepares a bank reconciliation

14

customer checks are misappropriated after being forward to the cashier for deposit

total amounts posted to the A/R ledger from remittance advices are compared with the validated bank deposit slip

15

Invalid transactions granting credit for sales returns are recorded

Good returned for credit are approved by the supervisor of the sales department

16

To make sure that items in an inventory listing are valid what would you test

Draw from a population of items on the listing (B) and trace them to the auditor's count sheet (S)

17

When developing audit programs - the auditor will apply tests of detail to accomplish what

detecting material misstatements affecting the financial statements

18

Internal Auditors objectivity

- Consider policies that prohibit the IA from auditing areas where they were recently assigned - this is because they will have the opportunity to overlook their own work, errors or frauds = not good

19

Looking at a client Stock holders equity accounts to determine whether there are restrictions on retained earnings resulting from loans, agreements or state law - what assertions are you testing

Classification and understandability - AND completeness