24.5 The managing director of a client company has refused to allow the auditor to write to a major customer who is on the list of receivables selected for direct confirmation, as the customer is a close personal friend who may be offended by the request.In these circumstances the auditor’s next step would be to
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1 .23.5 An audit objective is stated as “to ensure that all inventory on hand is reflected in the inventory balance at the reporting date”.Which of the following management assertions should the auditor test?
A Rights and obligations B Valuation and allocation C Completeness D Existence
2 .24.1 In order to gather sufficient, appropriate evidence, the auditor may make use of external confirmations. These may take the form of being a positive or negative request.A positive confirmation request for trade receivables always asks respondents to reply to the auditor indicating whether or not they agree with the information provided.Is this statement true or false?
A True B False
3 .24.2 During their interim audit the auditors discover that there is often a delay between goods being delivered to customers and the subsequent raising of a sales invoice.Which test is most likely to establish the extent of any understatement of receivables at the year end?
A Comparing goods despatch notes issued shortly after the year end with sales records B Comparing goods despatch notes issued shortly before the year end with sales records C Comparing sales invoices issued shortly before the year end with goods dispatched notes D A receivables confirmation with a d...
4 .24.4 How would an auditor trace transactions if the objective of the auditor’s tests of details is to detect possible understatement of sales?
A From purchase order to shipping documents B From cash receipts to sales invoices C From shipping documents to sales invoices
5 .24.3 The auditor of Lydney Co reviews the receivables ledger at the planning stage for the year end audit and determines that it comprises a large number of small balances, with a few larger balances, which are settled, on average, in two months. As in previous years, the reporting deadline is one month after the year end. Internal controls are considered to be effective and the error rate is expected to be low.What is likely to be the most effective substantive audit procedure to assist in the verification of year end receivables?
A Request a sample of customers to confirm the balance on their account at an interim date and review movements to the year end B Request a sample of customers to confirm the balance on their account at the year end C Trace a sample of invoices and cash receipts through the system to the customers...
7 .25.2 What is a key source of audit evidence for the issue of ordinary shares?
A Numbered share certificates B Issuing agent’s records C Minutes of the board of directors (1 mark)
8 .25.3 A company uses the services of a company secretary agent to deal with all regulatory issues relating to share capital including maintenance of the share register, share issues and statutory returns.What written confirmation should the auditor obtain from the company’s agent?
A Details of any restrictions on the payment of dividends B The number of shares issued and outstanding C Guarantees of preferred share liquidation value D The authorised share capital
9 .25.4 An auditor is in the process of performing substantive procedures on a client’s equity balances and traces share-related transactions recorded during the year to the board minutes.Which of the following assertions is the auditor testing with this procedure?
A Valuation B Understandability and classification C Existence and occurrence D Completeness
10 .25.1 The financial statements of a manufacturing company do not disclose a loan of USD1,500 made to a director during the year and repaid in full before the year end. The company’s profit for the year was USD2million.What reference, if any, should be made to this matter in the audit report?
A No reference is necessary B As an except for opinion, giving details of the loan (lack of evidence) C As an except for opinion, giving details of the loan (material misstatement) D An adverse opinion, giving details of the loan
