ENGLISH FOR ACCOUNTING- AUDIT EVIDENCE

Họ và tên: Phan Thị Thu Hà

Mã SV: 11171344
Exercise 1:
Examples Types of audit evidence
1 Review the accounts receivable with the credit Inquiries of the client
manager to evaluate their collectibility.
2 Compare a duplicate sales invoice with the sales Documentation
journal for customer name and amount.

3 Add the sales journal entries to determine whether Recalculation

they were correctly totaled.
4 Count inventory items and record the amount in the Physical examination
audit files.

5 Obtain a letter from the client’s attorney addressed Confirmation

to the CPA firm stating that the attorney is not
aware of any existing lawsuits.

6 Extend the cost of inventory times the quantity on Reperformance

an inventory listing to test whether it is accurate.
7 Obtain a letter from an insurance company to the Confirmation
CPA firm stating the amount of the fire insurance
coverage on buildings and equipment.

8 Examine an insurance policy stating the amount of Documentation

the fire insurance coverage on buildings and
equipment.
9 Calculate the ratio of cost of goods sold to sales as Recalculation
a test of overall reasonableness of gross margin
relative to the preceding year.

10 Obtain information about internal control by Inquiries of the client

requesting the client to fill out a questionnaire.

11 Trace the total in the cash disbursements journal to Documentation

the general ledger.
12 Watch employees count inventory to determine Observation
whether company procedures are being followed.

13 Examine a piece of equipment to make sure that a Reperformance

major acquisition was actually received and is in
operation.

14 Calculate the ratio of sales commission expense to Recalculation

sales as a test of sales commis -sions.

15 Examine corporate minutes to determine the Documentation

authorization of the issue of bonds.
16 Obtain a letter from management stating that there Confirmation
are no unrecorded liabilities.

17 Review the total of repairs and maintenance for Recalculation

each month to determine whether any month’s total
was unusually large.

18 Obtain a written statement from a bank stating that Confirmation

the client has $15,671 on deposit and liabilities of
$500,000 on a demand note.

Exercise 2:
Examples Blanks Types of evidence
1 _____ the unit selling price times
quantity on the duplicate sales
invoice and compare the total to the
amount on the duplicate sales
invoice.
2 _____ whether the accounts
receivable bookkeeper is prohibited
from handling cash.

3 _____ the ratio of cost of goods sold

to sales and compare the ratio to
previous years.
4 _____ the sales journal and _____
the total to the general ledger.

5 _____ the sales journal, looking for

large and unusual transactions
requiring investigation.

6 _____ of management whether all

accounting employees are required
to take annual vacations.
7 _____ all marketable securities as of
the balance sheet date to determine
whether they equal the total on the
client’s list.

8 _____ the balance in the bank

account directly with the East State
Bank.
9 _____ a sample of duplicate sales
invoices to determine if the
controller’s approval is included and
_____ each duplicate sales invoice to
the sales journal for agreement of
name and amount.

10 _____ the agreement between

Johnson Wholesale Company and
the client to determine whether the
shipment is a sale or a consignment.

Exercise 3:
Examples Types of audit Audit objectives
evidence
1 Trace from receiving reports to Documentation Completeness
vendors’ invoices and entries in the
acquisitions journal.
2 Add the sales journal for the month Recalculation Accuracy
of July and trace amounts to the
general ledger.

3 Examine expense voucher packages Confirmation Classification

and related vendors’ invoices for
approval of expense account
classification.

4 Observe opening of cash receipts to Obsevation Completeness

determine that cash receipts are
promptly deposited and recorded.
5 Ask the accounts payable clerk Inquiries of the Posting and
client summarization
about procedures for verifying
prices, quantities and extensions on
vendors’ invoices.

6 Vouch entries in sales journal to Documentation Occurence

sales invoices and related shipping
documents.

Exercise 4:
Examples Types of audit Audit objectives
evidence
1 Trace selected quantities from the Physical Detail Tie- In
examination
inventory list to the physical
inventory to make sure that it exists
and the quantities are the same.

2 Compare the quantities on hand and Analytical Realizable value

procedures
unit prices on this year’s inventory
count sheets with those in the
preceding year as a test for large
differences.
3 Test extend unit prices times Documentation Completeness
quantity on the inventory list, test
foot the list, and compare the total to
the general ledger.

4 Question operating personnel about Inquiries of the Rights and

client obligations
the possibility of obsolete or slow-
moving inventory.

5 Send letters directly to third parties Confirmation Existence

who hold the client’s inventory and
request that they respond directly to
the auditors.

6 Select a sample of quantities of Reperfomence Completeness

inventory in the factory warehouse
and trace each item to the inventory
count sheets to determine if it has
been included and if the quantity
and description are correct.

7 Examine sales invoices and Documentation Existence

contracts with customers to
determine whether any goods are
out on consignment with customers.
Similarly, examine vendors’
invoices and contracts with vendors
to determine whether any goods on
the inventory listing are owned by
vendors.