Chapter 10
This fraud scheme involves recording a deposit in one bank without recording the related disbursement in another bank at year-end?
What is kiting?
To test whether recorded receivables actually exists, auditors select samples from this population.
What is the A/R subsidiary ledger?
Auditors perform this procedure during inventory counts to verify that items counted are included in the final inventory listing.
What is tracing test counts to the final inventory schedule?
This audit procedure examines payments made after year-end to identify liabilities that should have been recorded earlier.
What is the search for unrecorded liabilities?
Auditors use this schedule specifically to detect timing differences between cash receipts and disbursements across bank accounts.
What is a bank transfer schedule?
This type of confirmation is appropriate when risk is low and recipients are expected to ignore the request unless there is a problem.
What is a negative confirmation?
This valuation rule requires inventory to be recorded at the lower of cost or this amount.
What is Net Realizable Value?
Auditors are primarily concerned with this assertion for accounts payable because companies may omit liabilities.
What is completeness?
This audit evidence is obtained directly from the bank and is most useful for detecting erros in recording loans.
What is a bank confirmation?
When control risk is high, auditors typically use this type of confirmation requiring a response in all cases.
What is a positive confirmation?
This analytical procedure helps auditors identify slow-moving or obsolete inventory.
What is inventory turnover?
This document, prepared by accounts payable, authorizes the issuance of a check under strong internal control.
What is a voucher?
This document includes checks clearing shortly after year-end and helps verify reconciling items on the bank reconciliation.
What is a cutoff bank statement?
To detect overstated sales, auditors trace transactions in this direction.
What is from accounting records to source documents?
This control improves accuracy in receiving by preventing staff from knowing expected quantities in advance.
What is a blank purchase order?
To detect unauthorized disbursements, auditors would most likely select items from this population.
What are canceled checks?
This internal control reduces the risk of employees stealing customer payments by having customers send payments directly to the bank.
What is a lockbox system?
This assertion is tested when auditors ensure that sales recorded before year-end are not improperly recorded in the next period.
What is cutoff?
This audit objective ensures inventory includes all goods owned by the company, even if not physically present.
What is completeness?
This control ensures that payments are only made for goods actually received by matching invoices to this document.
What is a receiving report?