solution af34

For each of the following situations identify 01]]! one assertion the auditor is most likely testing with the procedure. Lin-ll 10. (1.5 marks each) Sources of audit evidence Confirming accounts receivable with business organisations vs. confirming receivables with consumers. 'v'isually inspecting an inventory of electronic components vs, performing an inventory turnover and sales analysis by products and product lines. Observing the counting of a client's year-end physical inventory vs. conrming the inventory held at an independent warehouse by requesting a continuation from the owner of the warehouse. Confirming a yearend bank balance with the client's banking institution vs. reviewing the client's yearend bank statement vs. having a cutoff bank statement as of 20 January for all activity from 3 1 December to 2!] January sent to the auditor. bserving the client's inventory composed primarily of sophisticated radar detectors and similar electronic equipment vs. observing the client's inventory composed primarily of sheet metal. Confirming the client's yearend bank balance with the bank vs. confirming the potential loss due to a lawsuit with the client's outside legal counsel. Testing the client's estimate of warranty liability by obtaining a copy of the client's spreadsheet used for caICulating the liability and determining the accuracy of the spreadsheet's logic by entering new data into the spreadsheet and independently calculating the result vs. developing an independent spreadsheet and using regression analysis to develop an independent estimate of the warranty liability using client sales and warranty return data. Reviewing all payments made to vendors and suppliers after year end to determine if they were properly recorded as accounts payable vs. requesting vendor statements at year end for all signicant vendors from whom the client made purchases during the year. 13 For a financial institution. testing the organisation's controls for recording customer savings deposits. including the existence of an independent department to explore any inquiries by customers vs. confirming year-end savings account balances with customers. For a financial institution. testing the organisation's controls for making and recording loans vs. confirming yearwend loan balances directly with cUstomers. nilmlinn 1'1 1'1\" I'I'IHIIIJD