- One of the principal methods of obtaining corroborative evidence available to auditors is by inquiry. Inquiry involves seeking information from knowledgeable persons inside or outside the entity. Confirmation is the name given to a specific form of inquiry that is particularly widely used. It involves obtaining written confirmation from a third party, typically, although not exclusively, in relation to an account balance in which the third party has an interest. Confirmations can therefore be used for the following balances.
1. Bank balance- the auditor can request the client‘s bankers to confirm the balance they are holding on behalf of the client as at the end of the year. This will confirm existence, completeness and accuracy;
2. Debtors- by carrying out debtors‘ circularization. The replies will provide corroborative evidence to confirm existence of the debtor;
3. Creditors- by carrying out creditors‘ circularization. The replies will provide corroborative evidence, completeness and accuracy of the creditor‘s balance;
4. Investments (such as government securities, shares)- requesting a confirmation from the issuer of the instrument will provide evidence to confirm existence and accuracy of the investment balances. E.g. requesting the Central bank to confirm the amount of investments in government securities held by a client;
5. Loans – requesting the provider of the loan to confirm how much they have granted the company and the terms of such facilities;
6. Contingent liabilities – if the contingency relates to litigation against the company, the auditor could seek confirmation from the lawyers on the facts of the case and the likely outcome. This will assist in evaluating whether the contingency has been properly treated in the financial statements
Wilfykil answered the question on February 22, 2019 at 07:05
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List four advantages and four disadvantages of using the risk-based audit approach when auditing the financial statements of limited companies
(Solved)
List four advantages and four disadvantages of using the risk-based audit approach when auditing the financial statements of limited companies
Date posted:
February 22, 2019
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Answers (1)
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State and briefly explain the action auditors should take if the management refuses to provide a letter of representation.
(Solved)
State and briefly explain the action auditors should take if the management refuses to provide a letter of representation.
Date posted:
February 22, 2019
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Answers (1)
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Explain the nature and purpose of a post-audit review
(Solved)
Explain the nature and purpose of a post-audit review
Date posted:
February 22, 2019
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Answers (1)
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Distinguish between a procedural audit and a balance sheet audit
(Solved)
Distinguish between a procedural audit and a balance sheet audit
Date posted:
February 22, 2019
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Answers (1)
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List three disadvantages of using standardized audit programmes and how these disadvantages can be avoided.
(Solved)
List three disadvantages of using standardized audit programmes and how these disadvantages can be avoided.
Date posted:
February 21, 2019
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Answers (1)
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Under what circumstances is one ineligible for appointment as an auditor of a company?
(Solved)
Under what circumstances is one ineligible for appointment as an auditor of a company?
Date posted:
February 21, 2019
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Answers (1)
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You have been asked by your firm to examine the payment vouchers of a company to establish the level of errors and then decide whether...
(Solved)
You have been asked by your firm to examine the payment vouchers of a company to establish the level of errors and then decide whether better results can be obtained through statistical techniques.
Required:
a) State the steps you would take in order to test the vouchers for the errors.
b) Why is it not satisfactory to pick vouchers from a limited period?
c) State under what circumstances statistical sampling is a good technique
Date posted:
February 21, 2019
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Answers (1)
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Outline the statutory provisions with regard to duties of external auditors
(Solved)
Outline the statutory provisions with regard to duties of external auditors
Date posted:
February 21, 2019
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Answers (1)
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Explain how an Internal Control Evaluation Questionnaire (ICEQ) differs from an Internal Control Questionnaire (ICQ).
(Solved)
Explain how an Internal Control Evaluation Questionnaire (ICEQ) differs from an Internal Control Questionnaire (ICQ).
Date posted:
February 21, 2019
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Answers (1)
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The auditing standard on subsequent events provide the basic principles and procedures as to the auditor‘s responsibilities and deal with:
i. Dating the auditor‘s report
ii. Audit...
(Solved)
The auditing standard on subsequent events provide the basic principles and procedures as to the auditor‘s responsibilities and deal with:
i. Dating the auditor‘s report
ii. Audit procedures
iii. Events after the date of the audit report.
Required:
a) In the context of subsequent events, what is the significance of the data of the auditor‘s report?
b) Outline the audit procedures considered necessary between the balance sheet date and the date of the auditor‘s report.
c) Summarise the appropriate actions of the auditor regarding events after the date of the audit report.
Date posted:
February 21, 2019
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Answers (1)
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Write in point form an audit programme to cover salary and wages of a small size firm.
(Solved)
Write in point form an audit programme to cover salary and wages of a small size firm.
Date posted:
February 21, 2019
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Answers (1)
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Does the auditor require a codified definition of ?reasonable care and skill or should this be left to professional judgment? Explain
(Solved)
Does the auditor require a codified definition of ―reasonable care and skill or should this be left to professional judgment? Explain
Date posted:
February 21, 2019
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Answers (1)
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Explain the auditor‘s planning process when planning for an audit of a new client.
(Solved)
Explain the auditor‘s planning process when planning for an audit of a new client.
Date posted:
February 21, 2019
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Answers (1)