CH 14 HW

When observing the taking of a physical inventory at year-end, the auditors will record the serial number of the last __________ issued to verify the accuracy of the cutoff of accounts payable.

receiving report

Auditors often obtain written __________ from management regarding the existence of unrecorded payables.

representations

When confirming the accounts payable , the approach is most likely to be one of :

selecting the accounts of companies with whom the client has perviously done the most business plus a sample of other accounts.

The least likely approach in auditing managements estimate relating to an accrued liability is to

send confirmations relating to the estimate

Ordinarily, the most significant assertion relating to accounts payable is :

Completeness

An audit of the balance in the accounts payable account is ordinarily not designed to :

Detect accounts payable that are substantially past due

Audit Procedure for: The existence of an unrecorded accrued payable not due for payment for several months.

Reviewing union contracts.

In an audit, the valuation of year-end accounts payable is most likely addressed by:

Confirmation

In performing a test of controls, the auditors vouch a sample of entires in the purchases journal to the supporting documents. Which assertion would this test of controls most likely test?

Existence

For effective internal control, the accounts payable department should compare the information on each vendor's invoice with the :

Receiving report and the purchase order.

A client is erroneously recorded a large purchase twice. Which of the following internal control measures would be most likely to detect this error in a timely and efficient manner?

Reconciling vendors' monthly statement with subsidiary payable ledger accounts.

Substantive Procedures for: Determine that the valuation of warranty loss reserves is measured in accordance with GAAP.

Test the computations made by the client to set up the accrual.

Auditor confirmation of accounts payable balances at the balance sheet date may be unnecessary because :

There is likely to be other reliable external evidence available to support the balances

Audit Procedure for: A payment was made prior to year-end for goods received but not ordered.

Vouching cash disbursements recorded prior to year-end.

Audit Procedure for: The existence of a fictitious account payable in an audit in which accounts payable are not confirmed.

Vouching selected accounts on the year-end trial balance of accounts payable.

When unrecorded liabilities are discovered by the auditors, they should evaluate whether the omission is sufficiently material to warrant __________.

an adjusting journal entry

Because the auditors are primarily concerned with the __________ of recorded payables, much of the audit work on accounts payable is performed after the year-end date.

completeness

Substantive Procedures for: Determine the existence of year-end recorded accounts payable and that the client has obligations to pay these liabilities.

Confirm outstanding year-end balances of payables.

Which of the following is the best audit procedures for determining the existence of unrecorded liabilities?

Examine selected cash disbursements in the period subsequent to year-end.

To determine that each voucher is submitted and paid only once, when a payment is approved, supporting documents should be canceled by the :

Individual who signs the checks

Substantive Procedures for: Determine that the presentation and disclosure of accounts payable are appropriate.

Inquire of management concerning the existence of related party transactions.

Audit Procedure for: A purchase was recorded before year-end which should have been recorded after year-end and payment of it has not yet occurred.

Reviewing receiving reports issued shortly before and after year-end.

Audit Procedure for: The existence of related party payables.

Reviewing unusual transactions during the year.

Which of the following procedures is least likely to be completed before the balance sheet date?

Search for unrecorded liabilities

Substantive Procedures for: Establish the completeness of recorded accounts payable.

Vouch purchases recorded after year-end.

An __________ of liabilities will exaggerate the financial strength of a company.

understatement