Auditing Course Project Part Vi
Course Project VI
∫ 1. Comparison of current listing of accounts payable with that of the previous audit date, noting significant changes in amounts and makeup. 2. Ratios: * Gross profit ratio * Overhead/material cost * Overhead/direct labor * Accounts payable/ purchases * Units purchased/units sold * Material/total production cost * Specific expense items/sales 3. Trends * Purchases by month * Gross profit by month * Other recurring expenses by month
Part B
1. | Use the computer to total the accounts payable list and trace the total to the general ledger. | 2. | Select a sample of 40 vendors and request that they send a copy of their year-end statement directly to you. Examine the vendors’ statements and reconcile these to the accounts payable list. | 3. | Trace from the accounts payable list to vendors’ invoices and statements for any non-responses. | 4. | Obtain number of last receiving report issued as part of physical observation of inventory. | 5. | Examine subsequent cash disbursements greater than $40,000 and examine related documentation to determine if such disbursements were properly recorded as liabilities as of the balance sheet date. | 6. | Trace a sample of receiving reports issued just before and after year-end to the appropriate journal and vendor invoice. | 7. | Examine vendor invoices for merchandise received shortly after year-end to determine whether they were on an FOB origin basis. | 8. | Review the list and master file for related parties, notes or other interest-bearing liabilities, long-term payables, and debit balances. | 9 | Review financial statements to make sure that material related parties, long-term, and interest-bearing liabilities are segregated. |
Part C.
Audit procedures would be conducted more extensively and sample sizes would increase in a situation where assessed control risk and inherent risk were high and analytical procedures indicated
∫ 1. Comparison of current listing of accounts payable with that of the previous audit date, noting significant changes in amounts and makeup. 2. Ratios: * Gross profit ratio * Overhead/material cost * Overhead/direct labor * Accounts payable/ purchases * Units purchased/units sold * Material/total production cost * Specific expense items/sales 3. Trends * Purchases by month * Gross profit by month * Other recurring expenses by month
Part B
1. | Use the computer to total the accounts payable list and trace the total to the general ledger. | 2. | Select a sample of 40 vendors and request that they send a copy of their year-end statement directly to you. Examine the vendors’ statements and reconcile these to the accounts payable list. | 3. | Trace from the accounts payable list to vendors’ invoices and statements for any non-responses. | 4. | Obtain number of last receiving report issued as part of physical observation of inventory. | 5. | Examine subsequent cash disbursements greater than $40,000 and examine related documentation to determine if such disbursements were properly recorded as liabilities as of the balance sheet date. | 6. | Trace a sample of receiving reports issued just before and after year-end to the appropriate journal and vendor invoice. | 7. | Examine vendor invoices for merchandise received shortly after year-end to determine whether they were on an FOB origin basis. | 8. | Review the list and master file for related parties, notes or other interest-bearing liabilities, long-term payables, and debit balances. | 9 | Review financial statements to make sure that material related parties, long-term, and interest-bearing liabilities are segregated. |
Part C.
Audit procedures would be conducted more extensively and sample sizes would increase in a situation where assessed control risk and inherent risk were high and analytical procedures indicated