1.For each of the following controls, identify whether the control leaves an audit trail. Also identify a test of control audit procedure the auditor can use to test the effectiveness of the control.

a. An accounting clerk accounts for all shipping documents on a monthly basis and initials the monthly shipping log.

b. Bank reconciliation are prepared by the controller, who does not have access to cash receipts.

c. As employees clerk in daily by using time clocks, a supervisor observes to make certain that no individual "punches in" more than one time card.

d. Vendors' invoices are approved by the controller after she examines the purchase order and receiving report attached to each invoice.

e. The cashier, who has no access to accounting records, prepares the deposit slip and delivers the deposit directly to the daily.

f. An accounting clerk verifies the price, extensions, and footing of all sales invoices in excess of P300 and initials the duplicate sales invoice when he has completed the procedure.

g. All mail is opened and cash is prelisted daily by the president's secretary, who has no other responsibility for handling assets or recording accounting data.

2.Hazel Jess, a new staff auditor, is confused by the inconsistency of the three audit partners she has been assigned to on her first three audit engagements. On the first engagement, she spent a considerable amount of time in the audit of cash disbursements by examining cancelled checks and supporting documentations, but almost no testing was spent in the verification of fixed assets. On the second engagement, a different partner had her do less intensive tests in the cash disbursements area and take smaller sample sixes than in the first audit, even though the company was much larger. On her most recent engagement under a third audit partner, there was a thorough test of cash disbursement transactions, far beyond that of the other two audits, and an extensive verification of fixed assets. In fact, this partner insisted on a complete physical examination of all fixed assets recorded on the books. The total audit time on the most recent audit was longer than that of either of the first two audits despite the smaller size of the company. Hazel's conclusion is that the amount of evidence to accumulate depends on the audit partner in charge of the engagement.

REQUIRED:

a. State several factors that could explain the differences in the amount of evidence accumulated in each of the three audit engagements as well as the total time spent.

b. What could the audit partners have done to help Hazel understand the difference in the audit emphasis on the three audits?

c. Explain how these three audits are useful in developing Hazel's professional judgment. How could the quality of her judgment have been improved on the audits?