Adopted AICPA Simulation Foreach of the account balances and associated assertions below select the audit procedure from the list provided that provides the most appropriate audit evidence for the account assertion.
Account Balances Assertion Procedure
1.Accounts Receivable Completeness a. Review confirmation of accounts receivable balances and agree to accounts receivable subledger.
b. Review list of accounts written off during year.
c. Review schedule of bad debt expense.
d. Trace individual customer account transactions to sales invoice.
e. Trace sales invoice and shipping documents just before year-end to customer account transactions.
2. Inventory Valuat ion and Allocation a. Examine invoices from suppliers.
b. Examine invoices paid subsequent to year-end and trace to subsidiary ledger.
c. Select items from inventory listing and locate the items in the warehouse.
d. Select items located in the inventory warehouse and trace to inventory listing.
e. Trace sales invoices and shipping documents just before year-end to customer accounts.
3.Fixed Assets Rights and Obligations a. Interview plant manager regarding fixed asset additions during the year.
b. Recalculate partial year depreciation for fixed asset acquisitions.
c. Trace fixed asset item to fixed asset master control listing.
d. Vouch fixed asset acquisitions to purchase invoices.
e. Vouch fixed asset acquisitions to related cash disbursement.
4. Accounts Paya ble Completeness a. Compare aging of accounts payable to prior periods.
b. Confirm accounts payable balance with suppliers.
c. Examine invoices paid subsequent to year-end and trace to subsidiary ledger.
d. Trace individual payable transaction to purchase order.
e. Vouch invoices for the purchase of supplies to receiving documents.
5. Cash Existence a. Agree bank statement to the subsidiary ledger. b. Agree cash balance per the bank reconciliation the year-end bank statement.
c. Agree cash balance to online year-end bank statement.
d. Recalculate bank statement balance including interest receivable.
e. Trace deposit per the bank statement to the cash subsidiary ledger.