Ch 11

Which of the following would most likely be detected by an auditor's review of the client's sales cutoff?

Inflated sales for the year

When sending out negative confirmations, what should auditors do if they do not come back?

Nothing

When a company assigns a lender an exclusive claim to their accounts receivable as part of their secured debt, it is called

Pledging of receivables

Which assertion would the following control cover? "The use of a Chart of Accounts with an independent review of account classifications" =

Presentation & Disclosure

Cooper, CPA, is auditing the financial statements of a small rural municipaity. The receivable balances represent residents' delinquent real estate taxes. Internal control at the municipality is weak. To determine the existence of the accounts receivable balances at the balance sheet date, Cooper would most likely:

Send positive confirmation requests.

Tracing copies of shipping documents to sales invoices will provide evidence that all

Shipments to customers were billed

To determine that all sales have been recorded, the auditors would select a sample of transactions from the:

Shipping documents file

An analysis of the aged accounts receivables is most directly related to which substantive test objective

valuation

There is a presumption that auditors will confirm accounts receivable unless the auditors' assessment of the risk of material misstatement is low.

And accounts receivable are immaterial , or the use of confirmations would be ineffective

Which of the following would provide the most assurance concerning the valuation of accounts receivable?

Assess the allowance for uncollectible accounts for reasonableness.

The most practical and effective audit procedure for detecting lapping is:

Comparing recorded cash receipts in detail against items making up the bank deposit as shown on duplicate deposit slips validated by the bank.

Which assertion would the following control not cover? "Reconcile bank accounts monthly" =

Completeness

Which of the following is not among the criteria that ordinarily exist for revenue to be recognized?

Delivery has occurred or is scheduled to occur in the near future.

Which of the following substantive procedures would not satisfy the audit objective for Presentation & Disclosure?

Evaluate accounting estimates related to revenues

Which of the following would you obtain first in the audit of accounts receivable?

confirmation requests from customers

When scheduling audit work, the auditors are most likely to confirm accounts receivable balances at an interim date if

internal control is strong