Question
The auditors of SSC Company, a nonpublic company, are working on both audit objectivesfor the various accounts and documentation requirements. Parts (a) through (d) of
The auditors of SSC Company, a nonpublic company, are working on both audit objectivesfor the various accounts and documentation requirements. Parts (a) through (d) of this question relate to objectives, while part (e) addresses documentation.The auditors have established the objectives listed below as a part of the audit. For eachobjective, select a substantive procedure (from the list of substantive procedures) that willhelp achieve that objective. Each of the procedures may be used once, more than once, or notat all. (a-d) are audit objectives, (1-10) are substantive procedures
a. Determine the existence of year-end recorded accounts payable and that the client hasobligations to pay these liabilities.
b. Establish the completeness of recorded accounts payable.
c. Determine that the presentation and disclosure of accounts payable are appropriate.
d. Determine that the valuation of warranty loss reserves is measured in accordance withGAAP.
1. Obtain a trial balance of payables and reconcile with the accounts payable subsidiaryledger.
2. Vouch sales from throughout the year.
3. Vouch purchases recorded after year-end.
4. Vouch sales recorded shortly before year-end.
5. Vouch major warranty expenses paid during 20X8.
6. Inquire of management concerning the existence of related party transactions.
7. Test the computations made by the client to set up the accrual.
8. Test the reasonableness of general and administrative labor rates.
9. Confirm outstanding year-end balances of payables.
10. Confirm warranty expenses payable as of year-end.
Note: Part (e) is possible to work in a meaningful way only if you have the professional standards availablepreferably in electronic form.
e. The auditors believe that it will be necessary to depart from a requirement relating toaccounts payable that is considered presumptively mandatory. Provide the AU-C sectionand paragraph(s) that address documentation requirements in this situation. You need onlypresent the requirement, not the application and other explanatory material.
Whittington, Ray; Whittington, Ray. Principles of Auditing & Other Assurance Services (p. 629). McGraw-Hill Higher Education. Kindle Edition.(This is just a question that i need help with.)
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