You are an audit manager on the yearend audit of Nicolas manufacturing. Your team was assigned a new junior audit staff member Michelle, who recently graduated from Schulich School of Business at York University. Michelle performed the following two audit procedures and provided you with a written explanation about the reliability of audit evidence that she obtained as part of conducting each procedure.

Procedure # 1

To verify the valuation of accounts receivable, I obtained from the A/R manager the excel schedule where he calculated the yearend adjustment posted to the allowance-for doubtful accounts. I reviewed the formulas used in the calculation and recalculated all the totals. Since the recalculation was done directly by me, (auditor), the reliability of this audit evidence is very high and I confirm that the accounts receivable balance at yearend is valued and stated correctly.

Procedure # 2

To verify the existence of inventory, I attended the yearend inventory count. While walking around the warehouse I enquired employees who were taking the count about any possible inventory items that could have been missed. For example, those located on top shelves. All the employees told me that they havent missed any items and that inventory on top shelves was counted. The reliability of this evidence is very high as the enquiry was done directly by me (auditor).

Review each of the procedures and the explanations provided by Michelle:

1. Is Michelles explanation about the reliability of the audit evidence that she obtained, correct? (Yes/No)

Procedure # 1 (Yes or No)

Procedure # 2 (Yes or No)

2. If not, what is the reliability of audit evidence obtained by Michelle ? and why?

Procedure # 1 :

Procedure # 2 :

3. Review the assertions covered by each procedure. Does Michelles work cover the stated assertion? If not, what assertion did Michelles work cover?

Procedure # 1 :

Procedure # 2 :