PPPO - Purchasing, Payables, Prepaids, & Other Liab.
PP&E
Inventory- General
Inventory Observation
100
When testing accounts payable, an auditor would be most concerned about this assertion
What is COMPLETENESS?
100
This document is used to record the quantity of goods the client takes delivery of
What is a receiving report?
100
This document helps the auditor to evaluate the activity in PP&E from one year to the next
What is a PP&E ROLLFORWARD?
100
Inventory that is small and valuable is susceptible to this?
What is THEFT/FRAUD?
100
This is the most ideal time to observe a client's inventory count
What is AS CLOSE TO YEAR END AS POSSIBLE?
200
An inventory observation can help the auditor ensure completeness of inventory, but even more importantly what other assertion?
What is EXISTENCE?
200
This test is used to discover liabilities related to the year under audit that the company has yet to put on the books
What is the Search for Unrecorded Liabilities?
200
This document would be the most helpful in providing 3rd party evidence about the purchase price and proper description of current year PP&E acquisitions
What is the VENDOR INVOICE?
200
Before inventory is approved for purchase, this form should be signed by an authorized employee
What is a PURCHASE REQUISITION?
200
An auditor should make sure a manufacturing client has done this prior to his/her arrival to ensure inventory is where it should be when they perform test counts
What is STOP PRODUCTION?
300
An auditor obtains the last 5 and first 5 shipping and receiving documents before and after the year-end date. This procedure tests which assertion?
What is CUTOFF?
300
These two documents can provide an auditor with the total amount a client owes to a vendor at the end of a given period
What is a VENDOR CONFIRMATION or a VENDOR STATEMENT
300
Other than recalculation, this type of substantive test would be appropriate to test depreciation expense
What is a SUBSTANTIVE ANALYTIC?
300
The Inventory Cycle is closely intertwined with these two cycles we have previously discussed
What are the PURCHASING/PAYABLES AND SALES/A/R cycles.
300
A client should be able to account for all of these to ensure there is a complete listing of everything counted during an inventory.
What are INVENTORY TAGS?
400
During an inventory observation, an auditor observes inventory that appears to be old and not salable on the warehouse floor that is still recorded at the original cost on the company's books. There may be an issue with what assertion?
What is VALUATION?
400
An auditor would want to see the CUSTODY of goods separated from these two functions:
What are AUTHORIZATION and RECORDING of purchases and payment
400
Review of board minutes would help the auditor to identify one of these two items related to PP&E (either answer accepted as correct)
What is either and asset DISPOSAL or ACQUISITION?
400
This type of risk assessment considers how industry-related factors impact inventory valuation
What is INHERENT RISK ASSESSMENT?
400
Selecting test counts from the warehouse floor and comparing to the client's records tests this assertion_____, while selecting test counts from the client's records and comparing that to what's on the warehouse floor test this assertion_______.
What is COMPLETENESS and EXISTENCE
500
A client has goods in their warehouse which are on consignment from another business. During an inventory observation, you notice these goods are recorded on the client's books. Which assertion has not been met?
What are RIGHTS and obligations?
500
When auditing prepaid insurance (or any other prepaid), the auditor would want to ensure the client has actually done this, to meet the existence objective
What is remitted payment?
500
Any significant Debits to Accumulated Depreciation would be covered by testing of this PP&E Rollforward activity
What is the testing of ASSET DISPOSALS?
500
You are auditing a client who has inventory stored and a third-party public warehouse. You will not be able to observe inventory at this location. As the auditor you should consider this procedure to determine the existence of that inventory
What is SENDING AN INVENTORY CONFIRMATION?
500
During an inventory observation you overhear the inventory manager mention that certain goods need to be set aside because the client had defaulted on a loan. These goods were likely...