4.

24

(a) There is no sufficient approriate evidence obtained to support the conclusion. To conclude the
balance, the material assertion must be verified. Test counts should also be selected from the factory
‘s invetory sheets and checked to the client ‘s sheet to test for completeness. Moreover no work has
been caried out on the valuation and allocation assertion.

(b) Sufficient approriate audit evidence has not been obtained to support the conclusion. The test of
control is test for existence and effectiveness of the controls. Because the sales clerk faling to
complete the ‘price checked’ box means that there were 3 deviations out of 20 for the test of
existence.

(c) Sufficient approriate audit evidence has not been obtained to support the conclusion. Gillan has
missed the posbile effects of the sales returns on the other accounts such as, valuation and
allocation of the invetory of product XLP, the account receivable and the allowances for the inventory
if the produt faulty.

(d) Sufficient approriate audit evidence has not been obtained to support the conclusion. The risk
with the advertising expense is understatement, considering the reduction of 50% of last year’s
balances. The testing done surely for overstatement

(e) Sufficient approriate audit evidence has not been obtained to support the conclusion. Gilian has
selected 20 payments and found three to be in errors, as they has not been properly accrued. This
might affect our assement of controls to ensure that expens are correctly accured. All items related
to services rather than goods, which mean that the amounts owing for services are not accrued.

9.16

Accuracy

+ Trace the number of sales to reciept book to ensure that details, in particular dollar amount is
recoreded correctly

Completeness

+ Undertake analytical procedures based on the average number of billable hours

+ Test a sample of reciepts fromt the reciepts book and ensure that all have been recorded.

+ Check that all pre-numbered sales receipts are accounted for

Occurrence

+ Trace sales recorded in the accounts to the reciept book

+ Obtain written document of services performed

+ Undertake analytical procedures based on the average number of billable hours

9.18

(a) The auditor want to test the accounts receivables are genuine obligations owed by customer at
the balance date, they can apply:

+ Confirms accounts receivables from custormers in writing.

test from subsidiary ledger to
supporting documentation of sale
(i.e. invoice or signed
delivery note).
(b) The answer to (a) above would be
unlikely to change if the existence of
accounts receivable is
still at risk. What may change is that
the auditor may identify controls that
would help to reduce
the risk of material misstatement for
these assertions. The auditor may
then test those controls
and reduce the extent of the
substantive testing procedures
outlined, if this is then determined to
be a more effective and efficient way
of gathering audit evidence to reduce
the risk of material
misstatement to an acceptable level
test from subsidiary ledger to
supporting documentation of sale
(i.e. invoice or signed
delivery note).
(b) The answer to (a) above would be
unlikely to change if the existence of
accounts receivable is
still at risk. What may change is that
the auditor may identify controls that
would help to reduce
the risk of material misstatement for
these assertions. The auditor may
then test those controls
and reduce the extent of the
substantive testing procedures
outlined, if this is then determined to
be a more effective and efficient way
of gathering audit evidence to reduce
the risk of material
misstatement to an acceptable level
test from subsidiary ledger to
supporting documentation of sale
(i.e. invoice or signed
delivery note).
test from subsidiary ledger to
supporting documentation of sale
(i.e. invoice or signed
delivery note).
+ test from subsidiary ledger to supporting documentation of sale (i.e. invoice or signed delivery
note).

(b) The answer to (a) above would be unlikely to change if the existence of accounts receivable is still
at risk. What may change is that the auditor may identify controls that would help to reduce the risk
of material misstatement for these assertions. The auditor may then test those controls and reduce
the extent of the substantive testing procedures outlined, if this is then determined to be a more
effective and efficient way of gathering audit evidence to reduce the risk of material misstatement to
an acceptable level.