ATG 457 CHAPTER 14

principle working

-lead sch -confirmation requests

unrecorded

Confirmation of accounts payable is emphasized less than confirmation of accounts receivable bc the greatest risk in the audit of liabilities is the possibility of ___ amounts.

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

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

Search for unrecorded liabilities

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

affects net income

a decision as to the materiality of an unrecorded transaction hinges to an important extent on whether the transaction:

creditors

a substantive procedure that auditors perform when the risk of material misstatement of accounts payable is high is to reconcile accounts payable with monthly statements from ____

fraud

if any inherent risk of accounts payable are related to ____, the auditor will make certain they understand the programs and controls establishment by management to control the risk

purchasing

in an effective purchasing system, a store or inventory control department will prepare and approve the issuance of a purchase requisition that will be sent to the ___ department

-a/p -a/r -stores

in an effective purchasing system, receiving reports should be sent to the ___ department

accrued

short term obligations for services of a continuing nature that accumulates over time are ___ liabilities

voucher ... disbursement

the validity of the amount in the general ledger control account is established by tracing posting to the ____ register and cash____journal.

-prepare a flowchart -perform a walk-through -use a questionnaire

which of the following tasks auditors use to obtain an understanding of internal control over accounts payable

Receiving report and the purchase order.

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

Individual who signs the checks

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

prior years

the auditing steps for accrued liabilities include performing a retrospective analysis of ___ estimates for evidence of management bias for significant estimates.

true

the most effective means of disclosing unrecorded accounts payable is comparing cash payments after the balance sheet date with the accounts payable trial balance

General Ledger

the validity of the amount in the ___ ___ control account is established by tracing posting to the voucher register and cash disbursements journal

Reconciling vendors' monthly statement with subsidiary payable ledger accounts.

A client 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?

Detect accounts payable that are substantially past due

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

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

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

past due

Auditors may review the portion of accounts payable that is ___ at year-end and compare it to corresponding data for previous year

Completeness

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

obtain an understanding of internal control over accounts payable

auditors will develop their planned assessed level of risk of material misstatement for the assertions about accounts payable after they:

after

most of the audit work on accounts payable should be performed ___ the balance sheet date

internal control

obj of the audit of accounts payable include obtaining an understanding of ___ ___ over accounts payable

officers

payables to a corporations___require particular attention by the auditor since they are not the result of arms length bargaining by parties of opposing interests.

related

proper b/s presentation of accounts payable require that any material amounts payable to ___ parties be listed separately from amounts payable to trade creditors.

send confirmations relating to the estimate

The least likely approach in auditing management's estimate relating to an accrued liability is to:

Existence

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

prepare a list of year end unpaid vouchers

when subsequent procedures to verify individual vouchers are done after the b/c date, the client should:

tests of controls

in the audit of account payable an auditor may revise the risk of material misstatement based on the result of:

substantive

when the auditor have found subsidiary records of accounts payable not in agreement with the general ledger control account, haphazard use of receiving reports and vouchers and purchase transactions not recorded until payment is made they should undertake extensive ___ work

is necessary to determine the operating effectiveness of certain controls

testing the voucher register or the accounts payable ledgers by vouching specific items back through journals to original documents

supporting vouchers, invoices, and other documents

vouching selected creditors balances to ___ is a substantive procedure that addresses the existence and valuation of accounts payable