You are working on the audit of Birmingham Ltd (Birmingham), a clothing retailer, for the year ending 30 June 2017. You have reviewed the audit plan for the related accounts in the sales and collection cycle. The audit plan documents the relevant assertions and the detailed procedure you are to perform in relation to each of these assertions.<\/p>
<\/p>
An extract from the audit plan is reproduced below:<\/p>
<\/p>
ITEM<\/p>
<\/p>
ASSERTION<\/p>
<\/p>
DETAILED AUDIT PROCEDURE<\/p>
<\/p>
1<\/p>
<\/p>
Accuracy<\/p>
<\/p>
Select some invoices and trace to sales journal, checking whether the amount has been recorded correctly on the sales journal for each invoice.<\/p>
<\/p>
2<\/p>
<\/p>
Cut-off<\/p>
<\/p>
Select a sample of sales invoices and trace to sales journal, determining whether each invoice has been recorded on the sales journal.<\/p>
<\/p>
3<\/p>
<\/p>
Completeness<\/p>
<\/p>
Review evidence that extensions on invoices have been recalculated by the senior accountant after the invoices have been raised by the invoicing department.<\/p>
<\/p>
4<\/p>
<\/p>
Occurrence<\/p>
<\/p>
Enter a fictitious order with a wrong type of goods (i.e. a type of goods that is not sold by the entity) to see if the order is accepted.<\/p>
<\/p>
Required<\/p>
<\/p>
For each of the items 1 to 4 above:<\/p>
<\/p>
(a)Indicate whether the audit procedure is a test of details (substantive test) or a test of controls.(4 marks)<\/p>
<\/p>
(b)Indicate whether the audit procedure correctly addresses the given assertion. (4marks)<\/p>
<\/p>
(c)For those audit procedures that do not address the given assertion, state the appropriate assertion(2 marks)<\/p>
<\/p>
<\/p>
<\/p>
2.2When checking the sales and account receivable accounts, the auditor would like to confirm the objectives below:<\/p>
<\/p>
ITEMS<\/p>
<\/p>
AUDIT OBJECTIVES<\/p>
<\/p>
I<\/p>
<\/p>
Sales transactions that are recorded actually occurred<\/p>
<\/p>
II<\/p>
<\/p>
The balance presented on account receivables aged trial balance (ATB) for each customer exists on the balance sheet date<\/p>
<\/p>
Required:<\/p>
<\/p>
For each of the objectives listed above:<\/p>
<\/p>
(a)state the name of management assertion from which the audit objective is derived. (2 marks)<\/p>
<\/p>
(b)advise the auditor of one (1) substantive test they should perform. (3 marks))<\/p>", "transcribed_text": "", "related_book": { "title": "Global Strategy", "isbn": "0357512367, 978-0357512364", "edition": "5th Edition", "authors": "Mike W. Peng", "cover_image": "https:\/\/dsd5zvtm8ll6.cloudfront.net\/si.question.images\/book_images\/649592eaa157d_32303.jpg", "uri": "\/textbooks\/global-strategy-5th-edition-9780357512364", "see_more_uri": "" }, "free_related_book": { "isbn": "0857192760", "uri": "\/textbooks\/101-ways-to-pick-stock-market-winners-2nd-edition-978-0857192769-254550", "name": "101 Ways To Pick Stock Market Winners", "edition": "2nd Edition" }, "question_posted": "2024-06-28 03:35:12", "see_more_questions_link": "\/study-help\/questions\/business-banking-2021-September-12", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/use-the-following-data-for-parts-a-through-f--251974", "description": "Use the following data for parts (a) through (f). a. Determine the equation of the least squares regression line to predict y by x. b. Using the x values, solve for the predicted values of y and the...", "stars": 3 }, { "url": "\/study-help\/business-statistics-in-practice\/2-a-marketing-manager-has-developed-a-regression-model-to-1981560", "description": "=+2. A marketing manager has developed a regression model to predict quarterly sales of his companys down jackets based on price and amount spent on advertising. An intern suggests that he include an...", "stars": 3 }, { "url": "\/select-apparel-purchased-90-new-shirts-and-recorded-a-total", "description": "Select Apparel purchased 90 new shirts and recorded a total cost of $2,258 determined as follows: Required: Make the needed corrections in this calculation. Give the journal entry(ies) to record this...", "stars": 3 }, { "url": "\/study-help\/questions\/following-are-the-preclosing-trial-balances-of-summerlin-senior-day-9838362", "description": "Following are the preclosing trial balances of Summerlin Senior Day Activity Center as of December 31, 2019. Prepare a statement of activities and a statement of financial position for the Center at...", "stars": 3 }, { "url": "\/study-help\/questions\/case-2-uot-printing-provides-printing-services-to-many-different-6451898", "description": "Case #2 UOT Printing provides printing services to many different corporate clients. UOT bids on print jobs, however the new ones, are negotiated on a cost-plus basis. Cost-plus means that the buyer...", "stars": 3 }, { "url": "\/study-help\/questions\/one-scientist-is-measuring-a-physical-quantity-on-a-strange-4887451", "description": "One scientist is measuring a physical quantity on a strange unit. For example, the time taken by the light to travel from a star to the earth was measured in units \"BRT\". If this unit has to make...", "stars": 3 }, { "url": "\/study-help\/questions\/what-is-the-variance-and-standard-deviation-of-of-4638-1014252", "description": "What is the variance and standard deviation of of 46.38, 46.18, 46.57, 46.72, 46.86, 46.58, 46.61, 46.64, 46.03, 45.93, 45.51, 45.53", "stars": 3 }, { "url": "\/study-help\/questions\/money-inc-a-usabased-business-has-an-acid-test-ratio-5750987", "description": "Money Inc., a USA-based business has an acid test ratio of 3 times, and the value of the current assets including closing inventories (comprising of trade receivables of $2,000,000 and cash of...", "stars": 3 }, { "url": "\/study-help\/questions\/we-look-at-how-companies-use-crm-scm-and-erp-1014441", "description": "we look at how companies use CRM, SCM, and ERP to gain a competitive advantage and run more efficiently. Find an industry\/business or company currently using one of those technologies (CRM, SCM,...", "stars": 3 }, { "url": "\/study-help\/questions\/1-what-are-the-practices-that-xerox-used-in-its-1014505", "description": "1. What are the practices that Xerox used in its TQM implementation? Discuss. 2. What are some barriers that you think Xerox has faced during TQM implementation? Relate them. 3. Does TQM...", "stars": 3 } ], "next_back_navigation": { "previous": "\/study-help\/questions\/why-might-it-be-a-good-tax-planning-strategy-for-4230932", "next": "\/study-help\/questions\/f-4230934" }, "breadcrumbs": [ { "name": "Study help", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers" }, { "name": "Business", "link": "https:\/\/www.solutioninn.com\/study-help\/questions-and-answers\/business" }, { "name": "Accounting", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/business-accounting" }, { "name": "You are working on the audit of Birmingham Ltd (Birmingham), a clothing", "link": "https:\/\/www.solutioninn.com\/study-help\/questions\/you-are-working-on-the-audit-of-birmingham-ltd-birmingham-4230933" } ], "skill_details": { "skill_id": "9", "skill_name": "Accounting", "parent_id": "1" } }1" } }