Chapter 6
[ LO1 ] The audit program paperss elaborate information about audit processs to be performed on the battle.Thymine
[ LO2 ] Scaling the audit refers to suiting the audit work into the proper context in footings of the battle ‘s size, environment, and complexness.Thymine
[ LO2 ] Statutory audits are required on all integrated audits performed in conformity with international accounting criterions.F
[ LO2 ] An audit program will be the same regardless of whether the client company outsources its fiscal activities to a service supplier or conducts the activities in house.F
[ LO3 ] Materiality is a step of magnitude ; yet, it is affected by both quantitative and qualitative factors.Thymine
[ LO3 ] Materiality is first set at the history balance degree and is so aggregated to the fiscal statement degree.F
[ LO4 ] The constituents of the fraud trigon include inducement, chance, and rationalisation.Thymine
[ LO5 ] A client company ‘s new or modified accounting information system requires more audit attempt to understand the new system and measure its design and operating effectivity.Thymine
[ LO5 ] An audit scheme will concentrate on traveling concern issues for a client company runing in an industry which has experienced a recent market downswing.Thymine
[ LO6 ] Computers are the primary resources used on an audit.F
[ LO6 ] A extremely effectual audit would hold all of its testing performed at an interim O§U„U…O¤U‚O?O© day of the month.F
[ LO7 ] An IT specializer may be used to inspect systems certification and execute other processs for an audit battle when the client company uses new, emerging engineering.Thymine
[ LO7 ] Preliminary clip budget information is compared to existent clip worked and is used for intents of charge, public presentation rating, and future command.Thymine
[ LO8 ] Auditors test the operating effectivity of those controls that are intended to forestall and observe material misstatements.Thymine
[ LO8 ] Tracing refers to looking at the back uping certification for a recorded figure.F
[ App.A ] A chief hearer may portion duty for an audit sentiment when another hearer performs all of the audit processs for subordinate of the client company.Thymine
[ App.A ] For histories that involve important estimations, require a high grade of judgement, or are susceptible to direction override of controls, a chief hearer may wholly trust on the work of others in finding whether those histories are materially misstated.F
Multiple Choice
[ LO1 ] Planning is a uninterrupted procedure that must happen throughout the audit battle because( a ) disconfirming information is likely to originate.
( B ) the audit commission is likely to indicate out defects in the original audit program.
( degree Celsius ) all information impacting the audit occurs at the same time.
( vitamin D ) hearer accomplishment degrees are continuously fluctuating.
A
[ LO1 ] Development of the audit scheme includes all of the undermentioned activities except( vitamin E ) stipulating the work that has to be performed.
( degree Fahrenheit ) stipulating the timing of the work to be performed.
( g ) documenting an audit planning memoranda.
( H ) specifying initial estimations of audit hazard and materiality.
C
Risk appraisal points the hearer to the of import countries of the client ‘s operations and fiscal statements in order to
( I ) understand of import countries of the client ‘s operations and fiscal statements.
( J ) place possible jobs.
( K ) find what needs to be accomplished during the audit.
( cubic decimeter ) all of the above
Calciferol
LO1,2 ] Which of the followers is non a consideration for an hearer while “ scaling ” the audit?
( m ) The client company has multiple locations throughout the part.
( N ) Another house is responsible for scrutinizing one of the client ‘s out-of-town subordinates.
( O ) An outside service supplier prepares all of the client company ‘s paysheet accounting records.
( P ) The client company plans to engage and develop employees so that it can fix its paysheet accounting records in-house within the following two old ages.
Calciferol
[ LO2 ] An experient audit squad will get down be aftering the audit before it knows all the specific information about a peculiar client company because( Q ) experienced hearers know the general model of what needs to be done on any audit.
( R ) hearers experienced in the client ‘s industry understand the activities and hazards of the industry, which gives them an apprehension of the of import fiscal statement histories and ICFR countries.
( s ) hearers experienced with this client company have already gained rather a spot of information from the client credence or continuation procedures.
( T ) all of the above
Calciferol
[ LO2 ] Scaling the audit refers to( U ) weighing the hazards associated with the client ‘s susceptibleness U‚O§O?U„USO© to fraud.
( V ) fixing grounds for an outside service supplier.
( tungsten ) suiting the audit work to the specific features of the client.
( ten ) delivering merchandises or services as contracted in the engagement missive.
C
[ LO2 ] Deliverables refers to the( Y ) timing of the hearer ‘s credence of the client company.
( omega ) merchandises and services as contracted in the engagement missive.
( aa ) grade of correlativity between the audit work to the specific features of the client.
( BB ) hearer ‘s experience in the client ‘s industry.
Bacillus
[ LO2 ] The range of the battle depends upon all of the undermentioned considerations except the( milliliter ) presentation of the client ‘s accounting information.
( Doctor of Divinity ) usage and importance of IT to the client ‘s activities and ICFR.
( EE ) ability to utilize audit grounds performed by the client ‘s internal hearers.
( ff ) timing of the client ‘s financial year-end.
Calciferol
[ LO2 ] The range of an audit squad ‘s work will be more extended( gg ) for a first twelvemonth audit battle as opposed to a go oning audit.
( hh ) when internal hearers perform work to be used as grounds by the external hearers.
( two ) when a user company ‘s hearer relies upon a study provided by an hearer of the service supplier.
( jj ) for a company with effectual entity-level controls.
A
[ LO3 ] An internal control that is uneffective to the extent that it might non forestall the fiscal statements from being materially misstated is referred to as a( kk ) important hazard
( ll ) substantive mistake
( millimeter ) stuff failing
( nn ) tolerable misstatement
C
[ LO3 ] Which of the following would non be an appropriate benchmark U…O±O¬O?USO© to utilize in puting fiscal statement-level materiality?( oo ) a per centum of entire gross
( pp ) a per centum of entire assets
( qq ) a per centum of current liabilities
( rr ) a per centum of net income from go oning operations
C
[ LO3 ] The materiality threshold O?O?O?O© for each history balance or category of minutess is called( US Secret Service ) tolerable U…U‚O?U?U„O© misstatement
( terrestrial time ) stuff averment O?O?U?USO?
( uu ) substantial regulation of pollex
( vv ) history lack
A
[ LO3 ] For intents of an integrated audit, materiality is assessed within the context of users who have( ww ) appropriate cognition of concern and economic activities
( twenty ) an apprehension that fiscal statements are prepared and audited to degrees of materiality
( yy ) the ability to do appropriate economic determinations on the footing of information in the fiscal statements
( zz ) all of the above
Calciferol
[ LO4 ] Which of the followers is non an country of involvement for anti-fraud controls?( abdominal aortic aneurysm ) diary entries and accommodations made in the end-of-period fiscal coverage procedure
( bbb ) related party minutess
( ccc ) hearer certificates U?O«O§O¦U‚ O§U„O?U?U?USO¶
( ddd ) important direction estimations
C
[ LO4 ] An illustration of an incentive/pressure for deceitful fiscal coverage hazard factor is( eee ) a menace to the client company ‘s fiscal stableness caused by rapid growing compared to that of other companies in the same industry.
( fff ) important operations located across international boundary lines in legal powers where differing concern environments exist.
( ggg ) inadequate occupation applicant showing procedures for employees with entree to hard currency.
( hhh ) uneffective communicating of the company ‘s ethical criterions by direction.
A
[ LO4 ] An illustration of an chance for embezzlement O§O®O?U„O§O? of assets risk factor is( three ) compensation O§U„O?O?U?USO¶ inconsistent O?USO± U…O?U†O§O?U‚O© with outlooks.
( jjj ) deficiency of complete and timely rapprochements of assets.
( Ku Klux Klan ) direction ‘s pattern of perpetrating to creditors to accomplish unrealistic prognosiss.
( lll ) known history of misdemeanors of Torahs and ordinances.
Bacillus
[ LO5 ] Significant developments within the client that affect audit scheme include:( mmm ) A alteration in ownership and/or capital construction has occurred.
( nnn ) Acquisitions or discontinued operations have late occurred.
( ooo ) The accounting information systems have been modified.
( palatopharyngoplasty ) All of the above
Calciferol
[ LO5 ] Significant developments in the client ‘s external environment that affect audit scheme include:( qqq ) Industry competition has increased.
( rrr ) Acquisitions or discontinued operations have late occurred.
( Selective Service ) A alteration in ownership and/or capital construction has occurred.
( ttt ) All of the above
A
[ LO5 ] Traveling concern issues may originate when:( uuu ) Acquisitions or discontinued operations have late occurred.
( vvv ) The accounting information systems have been modified.
( World Wide Web ) The economic system has negatively impacted the client company.
( thirty ) Changes in applicable accounting criterions affect the client company.
C
[ LO5 ] When audit clients get new, more sophisticated IT systems,( yyy ) The audit scheme will non be impacted every bit long as the responsibilities of accounting forces are chiefly unchanged.
( zzz ) Hearers with advanced IT cognition may necessitate to be added to the audit squad.
( aaaa ) The design of internal controls will be considered uneffective until those new controls have been tested.
( bbbb ) The timing of the hearer ‘s processs for reexamining interim fiscal statements will be accelerated.
Bacillus
[ LO5 ] One of the first processs performed by hearers during on-location audit work is the( cccc ) Development of the house ‘s audit scheme.
( dddd ) Preparation of the audit study.
( eeee ) Design of the audit program.
( ffff ) Constitution of an apprehension of the company ‘s ICFR systems.
Calciferol
[ LO5 ] Auditors may obtain information about a client company during other battles conducted for the client such as( gggg ) audits of a subordinate or other related party entity.
( hhhh ) reappraisal of quarterly fiscal statements filed with the SEC.
( iiii ) scrutinies of information included in a enrollment statement.
( jjjj ) All of the above
Calciferol
[ LO6 ] Which of the following would non be probably to take part in an audit be aftering meeting?( kkkk ) The nucleus audit battle squad.
( llll ) The audit squad ‘s revenue enhancement director
( mmmm ) The audit squad ‘s spouse for IT
( nnnn ) The chair of the client ‘s audit commission.
Calciferol
[ LO6 ] Which of the undermentioned points are included in the audit be aftering meeting?( oooo ) brainstorming about fraud hazards
( pppp ) set uping duty for fixing the fiscal statements
( qqqq ) set uping duty for monitoring of internal controls
( rrrr ) fixing the engagement missive.
A
[ LO6 ] Which of the undermentioned points would an audit battle spouse likely communicate with the members of his or her audit squad during a planning meeting?( Selective Service ) Duty for advising appropriate persons of any important issues or troubles encountered during the audit.
( tttt ) Designation of the type of audit study to be issued.
( uuuu ) The demand to finish the quarterly reappraisal before pass oning with any revenue enhancement professionals assigned to the audit battle.
( vvvv ) Duty for advising the audit commission and internal hearers of the house ‘s specific audit attack.
[ LO6 ] The audit be aftering meeting must( wwww ) take topographic point before the client credence determination is made.
( xxxx ) be attended by the full nucleus battle squad and the predecessor hearers.
( yyyy ) set up an apprehension among the members of the audit squad about the aims of the audit.
( zzzz ) prepare the internal hearers for the work they will be asked to execute to supplement the hearer ‘s processs.
C
[ LO6 ] The papers that presents all of the issues discussed as portion of audit scheme is the( aaaaa ) battle missive
( bbbbb ) quarterly fiscal statements
( ccccc ) audit planning memo
( ddddd ) hazard appraisal memo
C
[ LO6 ] Which of the undermentioned points in non typically documented in an audit planning memo?( eeeee ) audit engagement aims and deliverables
( fffff ) the hearers ‘ apprehension of ICFR and IT systems
( ggggg ) planned usage of the work of others during the audit
( hhhhh ) consequences of the quarterly reappraisal procedure
Calciferol
[ LO6 ] What is the primary resource used on an audit battle?( iiiii ) the client ‘s IT systems
( jjjjj ) the hearer ‘s IT systems
( kkkkk ) human resources of the audit house
( lllll ) the client ‘s internal hearers
C
[ LO6 ] To properly instruct and reexamine the work of audit squad members, the oversing hearer must:( mmmmm ) maintain abreast of accounting and audit issues and manage differences of sentiment among team members sing audit findings.
( nnnnn ) obtain direction from the chair of the audit commission sing the aims of the audit battle.
( ooooo ) communicate with the predecessor hearer sing differences of sentiment sing anterior twelvemonth audit findings.
( ppppp ) all of the above
A
[ LO6 ] It is of import for hearers to be on-location on the last twenty-four hours of the client ‘s financial twelvemonth when the client( qqqqq ) operates a eating house that does a considerable sum of concern on New Year ‘s Eve.
( rrrrr ) has important stock list activities such that the grosss and cargos of stock lists at year-end should be observed.
( Selective Service ) relies upon electronic confirmation to bespeak the timing of minutess.
( ttttt ) refuses to pay overtime rates for the audit squad during its busy season.
[ LO6 ] Which of the followers is non a valid ground for the public presentation of audit processs at an interim day of the month?( uuuuu ) More clip is available for direction to rectify jobs identified by interim audit testing.
( vvvvv ) The client company does non retain the records that are needed as audit grounds through the year-end clip frame.
( wwwww ) Most controls and minutess can non be audited during busy season.
( xxxxx ) More clip is available for the hearers to concentrate on job countries, if needed.
[ LO6 ] If audit trials are performed at an interim day of the month, auxiliary audit grounds:( yyyyy ) is non necessary because the same controls are assumed to be in topographic point that resulted in the balances tested during meantime.
( zzzzz ) is still needed sing the history balances between the interim testing day of the month and the terminal of the financial twelvemonth.
( aaaaaa ) is obtained from the predecessor hearer, when needed to confirm any alterations in the client ‘s ICFR systems.
( bbbbbb ) is the duty of the audit commission, as it would be inefficient for the hearers to concentrate on a individual audit country during multiple clip periods.
[ LO6 ] When audit trials are performed at an interim day of the month, the hearer must( cccccc ) obtain a missive from direction to corroborate the continued public presentation of internal controls and truth of the year-end balances.
( dddddd ) perform axial rotation frontward audit processs to find whether a control continued to execute the same manner through year-end.
( eeeeee ) reconcile history balances tested at an interim day of the month with the year-end balances in the same histories.
( ffffff ) Both ( B ) and ( degree Celsius )
[ LO7 ] Which of the followers is an illustration of a specializer who might help an audit battle squad on a bad audit country?( gggggg ) statistician
( hhhhhh ) banker
( iiiiii ) internal hearer
( jjjjjj ) revenue enhancement comptroller
[ LO7 ] An IT specializer may be involved in an audit battle to help with any of the undermentioned except( kkkkkk ) inspecting systems certification.
( llllll ) questioning of company forces about how the procedures are carried out and how IT controls are designed.
( mmmmmm ) fixing the IT planning memo.
( nnnnnn ) be aftering the trials of IT controls.
[ LO7 ] Which of the followers is non a relevant consideration in make up one’s minding whether an IT specializer is needed:( oooooo ) the client company ‘s capital construction
( pppppp ) the complexness of IT controls and systems
( qqqqqq ) the usage of emerging engineerings
( rrrrrr ) the usage of informations by multiple systems or procedures
[ LO7 ] Audit houses use clip budgets for( Selective Service ) bespeaking the sum of clip expected for the assorted degrees of hearers for each audit country.
( tttttt ) trailing and coverage clip spent on each audit country.
( uuuuuu ) charge and command and future battles.
( vvvvvv ) All of the above.
[ LO7 ] Time budgets are typically( wwwwww ) approved by the audit commission
( xxxxxx ) detailed by countries of the audit
( yyyyyy ) signed by the predecessor hearer
( zzzzzz ) All of the above.
[ LO8 ] Auditors test the operating effectivity of internal controls merely if they( aaaaaaa ) are efficaciously designed to forestall or observe material misstatements.
( bbbbbbb ) reference multiple hazard factors.
( ccccccc ) are applied in concurrence with other controls to turn to a individual hazard factor.
( ddddddd ) cause susceptibleness to material misstatements.
[ LO8 ] Substantive audit processs are performed so that the hearer may place( eeeeeee ) deficiencies in the design or runing effectivity of internal controls.
( fffffff ) weaknesses in the effectivity of the client company ‘s audit commission.
( ggggggg ) stuff misstatements in the client company ‘s fiscal statements.
( hhhhhhh ) Calculations and controls that mitigate the hazard of fraud.
[ LO7 ] Which of the followers is non a signifier of audit grounds?( iiiiiii ) recalculation
( jjjjjjj ) reperformance
( kkkkkkk ) repeat
( lllllll ) enquiry
[ LO7 ] ICFR trials to supply grounds on whether the controls can be relied upon for the fiscal statement audit can be performed( mmmmmmm ) merely during year-end because they must be performed at the same clip as fiscal statement audit processs.
( nnnnnnn ) merely during meantimes because they must be performed at the same clip as fiscal statement audit processs.
( ooooooo ) at any clip the grounds is available, every bit long as the full period of trust is evaluated.
( ppppppp ) at any clip after the substantial processs have been completed, so that the sentiment on fiscal statement misstatements is non superceded by the sentiment on the effectivity of controls.
[ LO8 ] Sufficient grounds may be provided without analyzing all of the minutess in an history balance is the hearer uses well-designed( qqqqqqq ) sampling attacks
( rrrrrrr ) internal control processs
( Selective Service ) review techniques
( ttttttt ) averments related to the just presentation of history balances.
[ LO8 ] The nature, timing, and extent of audit needed audit trials will depend upon the replies to each of the undermentioned inquiries except TYPO / Grammar – suggest deleting highlighted words( uuuuuuu ) How could a material misstatement go on?
( vvvvvvv ) What internal controls has the client implemented to turn to possible misstatements?
( wwwwwww ) How might internal controls fail such that a material misstatement occurs?
( xxxxxxx ) How many times have material misstatements been undetected?
[ LO8 ] When enquiry, observation, and review are all used to follow a dealing as it is initiated, authorized, processed, and recorded, the procedure is called a ( N )( yyyyyyy ) review
( zzzzzzz ) walkthrough
( aaaaaaaa ) averment
( bbbbbbbb ) analytical process
[ LO8 ] If an audit plan calls for the hearer to interview the client about an of import control activity, this is an illustration of which type of audit process?( cccccccc ) reperformance
( dddddddd ) tracing
( eeeeeeee ) review
( ffffffff ) enquiry
[ App ] Which of the followers is non a signifier of grounds obtained through the hearer ‘s direct personal cognition?( gggggggg ) observation
( hhhhhhhh ) reperformance
( iiiiiiii ) enquiry
( jjjjjjjj ) review
[ App ] A chief hearer may portion duty for an audit sentiment with( kkkkkkkk ) another independent hearer who has performed a important part of the audit work.
( llllllll ) the client ‘s internal audit staff, if they provide important aid to the audit squad.
( mmmmmmmm ) a specializer who provides adept advice on the rating of stock list.
( nnnnnnnn ) an lawyer who provides adept advice on a pending legal affair.
[ App ] Which of the followers is non an index of competency that is relevant to an hearer ‘s rating of other persons executing a part of the audit work?( oooooooo ) professional enfranchisement
( pppppppp ) professional experience
( qqqqqqqq ) degree of instruction
( rrrrrrrr ) entree to the board of managers
[ App ] If internal hearers provide direct aid to the external audit squad, the independent external hearer must( Selective Service ) reperform all of the work provided by the internal hearers.
( tttttttt ) supervise and measure the work performed by the internal hearers.
( uuuuuuuu ) garbage to publish an audit sentiment, due to a deficiency of independency.
( vvvvvvvv ) indicate a division of duty in the public presentation of the audit.
Matching
[ LO3 ] Following are the planning stairss involved in sing materiality in a top-down attack to be aftering for trials of controls. Number the points in from 1 ( top ) through 6 ( underside ) to bespeak the proper top-down sequence of the stairss.___ Identify hazards that could do material misstatement of relevant averments in a important history.
___ Set fiscal statement degree materiality
___ Design audit processs turn toing controls
___ Investigate controls turn toing hazards
___ Identify important histories
___ Determine relevant direction averments for important histories and set materiality at the history degree
Short-Answer Questions and Exercises
[ LO4 ] For each scenario below, indicate which component of the fraud trigon is present.( wwwwwwww ) Large sums of hard currency are on manus.
( xxxxxxxx ) Management failed to rectify ICFR lacks in a timely mode.
( yyyyyyyy ) The organisational construction is complex and lines or authorization are ill-defined.
( zzzzzzzz ) Future employee layoffs are expected.
( aaaaaaaaa ) Employee behavior suggests dissatisfaction with the company.
( bbbbbbbbb ) Restrictions on the hearer bound entree to grounds.
( ccccccccc ) Management efforts to act upon the range of the audit work.
( ddddddddd ) Industry factors threaten the company ‘s fiscal stableness.
( eeeeeeeee ) Significant related party minutess are audited by another house.
( fffffffff ) The personal fiscal state of affairs of direction is threatened.
[ LO6 ] Indicate the preferable timing during the audit procedure for executing each of the undermentioned processs. Explain your pick.( ggggggggg ) detecting the client ‘s physical stock list
( hhhhhhhhh ) testing of the operating effectivity of ICFR
( iiiiiiiii ) detecting the cargo and reception of stock lists
( jjjjjjjjj ) substantial testing of belongings and equipment history balances
( kkkkkkkkk ) axial rotation forward processs
( lllllllll ) testing of the design effectivity of ICFR
( mmmmmmmmm ) analyzing accommodation made during the class of fixing the fiscal statements
[ LO8 ] What different audit processs ( signifiers of grounds ) are appropriate for fiscal statement audits that are non applicable for proving of controls? [ LO8 ] For each of the undermentioned audit processs, indicate the type of grounds that is involved.( nnnnnnnnn ) reading a gross revenues contract
( ooooooooo ) finding whether a gross revenues bill is decently included in the gross revenues diary
( ppppppppp ) pass oning with direction about alterations in accounting forces
( qqqqqqqqq ) watching the teller execute the day-to-day shutting processs
( rrrrrrrrr ) verifying the mathematical truth of price reductions included on the gross revenues bill
( Selective Service ) verifying the truth of the gross revenues diary by mention to a back uping transportation papers and gross revenues bill
( ttttttttt ) having confirmation from an independent 3rd party
Suggested Solutions for Test Bank Questions – Chapter 6
True/False
Thymine
Thymine
F
F
Thymine
F
Thymine
Thymine
Thymine
F
F
Thymine
Thymine
Thymine
F
Thymine
F
Multiple Choice
a
degree Celsiuss
vitamin D
vitamin D
vitamin D
degree Celsiuss
B
vitamin D
a
degree Celsiuss
degree Celsiuss
a
vitamin D
degree Celsiuss
a
B
vitamin D
a
degree Celsiuss
B
vitamin D
vitamin D
vitamin D
a
a
degree Celsiuss
degree Celsiuss
vitamin D
degree Celsiuss
a
B
degree Celsiuss
B
vitamin D
a
degree Celsiuss
a
vitamin D
B
a
degree Celsiuss
degree Celsiuss
degree Celsiuss
a
vitamin D
B
vitamin D
degree Celsiuss
a
vitamin D
B
Matching
4,1,6,5,2,3
Short-Answer Questions and Exercises
a. Large sums of hard currency are on manus. – Opportunities
B. Management failed to rectify ICFR lacks in a timely mode. – Attitude/Rationalization
c. The organisational construction is complex and lines or authorization are ill-defined. – Opportunities
d. Future employee layoffs are expected. – Incentives/Pressure
e. Employee behaviour suggests dissatisfaction with the company. – Attitude/Rationalization
f. Restrictions on the hearer bound entree to grounds. – Attitude/Rationalization
g. Management efforts to act upon the range of the audit work. – Attitude/Rationalization
h. Industry factors threaten the company ‘s fiscal stableness. – Incentives/Pressure
I. Significant related party minutess are audited by another house. – Opportunities
J. The personal fiscal state of affairs of direction is threatened. – Incentives/Pressure
k. observation of the client ‘s physical stock list should be performed at the terminal of the client ‘s financial twelvemonth so that the fiscal statement balances can be verified.
l. testing of the operating effectivity of ICFR should be performed at interim, as internal controls are expected to be runing and capable to rating at any point. Besides, the interim testing will supply clip for the hearer to pass more clip on related proving if jobs are encountered, and direction will hold more clip to rectify the job before the terminal of the financial twelvemonth.
m. observation of the cargo and reception of stock lists should be performed at the terminal of the client ‘s financial twelvemonth so that the hearer can find that the minutess were recorded in the proper period.
n. substantial testing of belongings and equipment history balances should be performed during the year-end testing stage, as concluding history balances. However, it is besides possible to scrutinize these balances during an interim testing stage and subsequently execute a axial rotation frontward to year-end.
o. axial rotation forward processs must be performed during the year-end testing stage, as concluding history balances are needed in order to measure the alteration during the period from interim proving through the day of the month of the client ‘s financial year-end.
p. testing of the design effectivity of ICFR should be performed at meantime for efficiency grounds. See b. above.
q. analyzing accommodation made during the class of fixing the fiscal statements must be performed during year-end testing ( after the fiscal statements have been prepared ) .
Both trials of controls and substantial trials of fiscal statement history balances involve enquiries, review of paperss, observation of operations, and reperformance of controls. However, the undermentioned extra processs are available for audits of fiscal statements:
i. review of touchable assets
two. external verifications
three. recalculations
four. analytical processs
r. reading a gross revenues contract – review of paperss
s. finding whether a gross revenues bill is decently included in the gross revenues diary – review of paperss ; following
t. pass oning with direction about alterations in accounting forces – enquiry
u. watching the teller execute the day-to-day shutting processs – observation
v. verifying the mathematical truth of price reductions included on the gross revenues invoice – recalculation
w. verifying the truth of the gross revenues diary by mention to a back uping transportation papers and gross revenues invoice – review of paperss – vouching
x. having confirmation from an independent 3rd party – external verification
