Audit Program. The following are ten audit procedures taken from an audit program:

1 Review board of directors’ minutes to verify approval of equipment purchases.

2 Discuss with the cash disbursements clerk his or her and duties and observe whether he or she has responsibility for handling cash or preparing the bank reconciliation.

3 Examine the accounting clerk’s initials on monthly bank reconciliations as an indication of whether they have been reviewed.

4 Review sales, cash receipts and sales returns cutoffs.

5 Examine the initials on vendors’ invoices that indicate internal verification of pricing, extensions (price X units), and footing by a clerk.

6 Reconcile marketable security summary schedules to general ledger.

7 Compare the balance in payroll tax expense with previous years, taking into consideration any changes in payroll tax rates.

8 Count a sample of inventory and check against inventory sheets.

9 Account for a sequence of checks in the cash disbursements journal to determine whether any have been omitted.

10 Confirm accounts payable balances in writing with a sample of vendors.

Required:

A. For each of the above audit procedures, give the audit area (accounts receivable, cash, etc.), and an example of an audit objective and a financial statement assertion.

B. For each audit procedure, list a technique for gathering evidence used (inquiry of client personnel, inspection, observation, examination of documents, reperformance, confirmation, analytical procedures, and physical examination – see Chapter 10 for definitions of evidence-gathering techniques).