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Required: Auditors use different types of audit procedures to gather the evidence necessary to conclude that the risk of material misstatement for each relevant assertion
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Auditors use different types of audit procedures to gather the evidence necessary to conclude that the risk of material misstatement for each relevant assertion has been reduced to an acceptably low level.
Identify the type of procedure used by auditors for each of the following examples.
tabletable Find brokers' invoices and canceled checks showing agreementwith record amounts for securities investments.Confirmation Observe test counting of client's physical inventory taking.,Observationtable Select a sample of shipping documents and trace them to salesinvoices sales journal recording, and posting to general ledger.Document inspection tracing Ask client personnel about accounting events.,Inquiry and written representationstable Study financial information in relation to nonfinancialinformationObservation Scan expense accounts for credit entries.,Document inspection scanning Compare financial information with that of prior periods.,Document inspection scanning Obtain written client representation letter., Scan payroll check lists for unusually large checks., Complete an internal control questionnaire., Obtain client's lawyer's letter.,table Study predictable financial information patterns eg ratioanalysis Analyze valuation of receivables by reaging them by due date., Obtain accounts receivable confirmations., Compare financial information with budgets and forecasts., Verify existence of fixed assets by locating them., Compare financial information to industry statistics., Recompute the client's calculation of depreciation expense.,
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