Part 6 Types of Audit Evidence (23 points) I. Evidence has been defined as relating to the auditors' conclusion. State what the conclusion is about. Discuss. II. Classify each of the following according to type of audit evidence: A. Analytical procedures E. Observation B. Confirmation F. Inspection of Assets [ i.e. Physical Examination] Examination of Documents G. Recalculation D. Inquiry H. Reperformance I. Scanning Items 1. 2. 3. 5. Trace shipping documents to related sales invoices to determine that sales have been billed. Check the extensions (multiplications) on sales invoices. Vouch sales invoices to related shipping documents to see if billed items were shipped. 4. Send letters to customers asking them how much the customers owe the company. Ask the manager about the manner that Bad debts expense is calculated. Review the Accounts Receivable Subsidiary Ledger for negative (i.e. credit) amounts for possible reclassification. 7. The auditor checks an internal control procedure (i.e. a walkthrough) to gain an understanding of the client's internal control structure. 8. The auditor tests interest expense by developing an overall reasonableness test rather than redoing all the bond amortization schedules. [Don't use G, recalculation] 6. Select only ONE letter for each of the procedures Answers 1. 3. 5. 7. 2. 4. 6. 8