Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

During a discussion, one auditor noted that her approach to testing sales transactions was to select a random sample of recorded sales and trace back

During a discussion, one auditor noted that her approach to testing sales transactions was to select a random sample of recorded sales and trace back through the system to supporting documents, noting that all items billed were shipped and were invoiced at correct prices. She stated that she then had good confidence about the correctness of the sales account, and, therefore, having performed a dual-purpose test, the remaining work on sales (assuming the procedures also evidenced the working of control procedures) could be limited. A second auditor disagreed. Her approach was to select evidence of shipments, such as prenumbered shipping documents, and then trace forward through the system to the actual invoice, noting the existence of control procedures and the correctness of the invoice processing. If no exceptions were noted, however, she agreed with the first auditor that the remaining audit work on the sales account could be limited.

a. Which auditor is right, or are both right? Explain. b. What assertion is tested by the second auditor? c. What is a dual-purpose test? Explain whether the tests performed by both of the auditors would be considered dual-purpose tests.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Information Systems A Practictioner Emphasis

Authors: Cynthia D. Heagy, Constance M. Lehmann

10th Edition

1891002821, 9781891002823

More Books

Students also viewed these Accounting questions

Question

Explain how to dispute irrational beliefs. Critical T hinking

Answered: 1 week ago

Question

Understand the use of different performance-rating techniques

Answered: 1 week ago