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For this I have a homework assignment but the verbiage is confusing me I was hoping to get help on it Assessment 5 Problems Part
For this I have a homework assignment but the verbiage is confusing me I was hoping to get help on it
Assessment 5 Problems Part A: Substantive Procedures and the Financial Statement Listed below are several misstatements of inventory, accounts payable, and accrued liabilities accounts. For each of the following misstatements, design a substantive audit procedure that provides reasonable assurance of detecting the misstatement. 1. Bonuses awarded to senior management have not been recorded. 2. Several suppliers that the company had not purchased from prior to this year were omitted from the accounts payable listing. 3. When employees counted the physical inventory, included were a number of items that were consigned to the company by a client company. 4. There was no disclosure in the nancial statements of a material account payable to a related party. 5. The year-end payroll accrual was understated. 6. One-third of the dollar amount of diamond jewelry inventory is actually cubic zirconia or white sapphires. 7. The accounts payable prepared checks to pay a vendor's invoice twice. The invoice is still shown as an outstanding account payable. 8. Company personnel, conducting an inventory, informed the auditors that underground petroleum tanks contained high-octane gasoline when they actually contained water. 9. The accounting department of the client failed to record warranty expenses incurred after year-end applicable to prior year sales. 10. Inventory in one remote area of the warehouse was overlooked and thus not included in the client's physical inventory count. Part B: Auditing Revenue Processes and Completing the Audit For each of the following problems, provide an audit procedure that would have identied the problem. 1. Management's estimate for the adjustment to allowance for doubtful accounts is inadequate. 2. A cash payment received for credit toward an account receivable was deposited in the bank in the current period but was not posted to the accounts receivable record, trial balance, or general ledger until the subsequent period. 3. For a brief period, sales are recorded using an outdated price list with amounts that were below the current prices. The transactions were recorded accurately based on the price list used. Management is not aware that the problem occurred. 4. Cashiers are regularly taking money received for the exact amounts of sales and not recording the sales. Customers do not ask for receipts. 5. False sales are being recorded by management at or near year-end and are posted as accounts receivable. 6. Sales on account for services that take place in the rst two days of the subsequent year have been posted as sales occurring in the audit year. 1Step by Step Solution
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