Inventory and COGS
This assertion ensures all inventory that should be recorded is included.
What is completeness?
Observing inventory counts primarily tests this assertion
What is existence?
This is the most significant assertion related to accounts payable.
What is completeness?
This internal control requires that issuance of debt or stock be approved by the board of directors or another designated authority before the transaction is recorded.
What is proper authorization?
This prior misstatement approach considers only the amount originated in the current income statement.
What is rollover approach?
This document provides evidence that inventory has been shipped and helps auditors test proper cutoff.
What is a bill of lading?
This control involves periodic inspection of fixed assets to ensure they still exist.
What is a physical inventory checks of PPE?
Auditors use this document to verify amounts owed to vendors.
What is a vendor statement?
All corporate capital stock transactions should be traced to this document.
What is minutes of board of directors?
a) The audit reported is issued when.. b) the audit report is addressed to these people and c) The audit report is signed off using this name.
a) What is appropriate and sufficient evidence is obtained
b) Board of Directors
c) The CPA firm
This assertions primary risk related to an audit is possible overstated inventory
What is existence?
This document supports the purchase of a fixed asset.
What is a vendor invoice?
This procedure reviews payments made after year-end to identify unrecorded liabilities.
What is a search for unrecorded liabilities?
The best option that acts as an independent third party between the BOD and outside investors concerning mergers, acquisitions and the sale of treasury stock.
What is the bank?
The place an audit firm has disclosed a going concern of a public company in their audit report.
What is an explanatory paragraph?
DOUBLE DAILY: While observing the physical inventory count, an auditor notices several high-value items are counted twice. If not corrected, what is the likely impact on cost of goods sold? What is the assertions being tested?
What is cost of goods sold is understated and net income is overstated? What is existence
How can you vouch PPE acquisitions
(think substantive procedures - 2 of them)
Ensure revenue expenditure is not misclassified
For effective internal control: the accounts payable department should compare information on each vendor's invoice with these two supporting documents.
What is the Receiving report and the purchase order
Why is testing interest expense a good procedure related to long-term payable accounts.
What is interest expense may disclose the existence of any unrecorded payables when corresponding interest payments are being made?
These are the conditions of subsequent events to be type 1.
What is this type of subsequent even includes those events that provide additional evidence with respect to conditions that existed at the balance sheet date and effect the estimates inherent in the process of preparing financial statements?
During inventory testing, an auditor identifies items that have not sold in over two years and are no longer in demand. What is the primary audit concern?
What is inventory may be overstated due to failure to write down obsolete items to net realizable value?
What is the principle objective of an auditor analyzing maintenance and repairs expense account?
What is to determine whether expenses have been improperly capitalized or capital expenditures have been incorrectly expensed?
DAILY DOUBLE: Four steps that should be taken before recording a vendors invoice as an approved liability. (list 2 but no daily double)
What is:
All goods and listed on invoice were received
Quantities and conditions are conformed with appropriate specifications
Prices, credit terms and shipment charges conform with purchase agreement
All computations involved are accurate
An auditor can best verify a client's sinking fund transaction and year end balance by using this procedure.
What is confirmation with bond trustee?
The name of the opinion given: during the audit, the auditor identifies the client has been using non GAAP principles to assess their inventory account. The client is a retailer and only income is from sale of inventory.
What is adverse opinion?