University:
California State University, Northridge
Course:
ACCT 460 | Auditing Principles and Analytics
Academic year:

2024
Views:

395

Pages:

20
Author:

Mckenna Welch

Audit Responsibilities and Objectives Chapter 6 Part 2 Learning Objective 7 Link the six general transactionrelated audit objectives to management assertions for classes of transactions. General Transactions-related Audit Objectives Occurrence Recorded transactions exist Completeness Existing transactions are recorded Accuracy Recorded transactions are stated at the correct amounts General Transactions-related Audit Objectives Posting and summarization Transactions are included in the master files and are correctly summarized. Classification Transactions are properly classified. Timing Transactions are recorded on the correct dates. Hillsburg Hardware Co. (Applied to Sales Transactions) Management Assertions About Classes of Transactions and Events General Transactionrelated Audit Objectives Specific Sales Transactionrelated Audit Objectives Occurrence Occurrence Recorded sales are for shipments made to nonfictitious customers Completeness Completeness Existing sales transactions are recorded Accuracy Accuracy Recorded sales are for the amount of goods shipped and are correctly billed and recorded Hillsburg Hardware Co. (Applied to Sales Transactions) Management Assertions About Classes of Transactions and Events General Transactionrelated Audit Objectives Specific Sales Transactionrelated Audit Objectives Accuracy Posting and summarization Sales transactions are properly included in the master file and are correctly summarized Classification Classification Sales transactions are properly classified Cutoff Timing Sales transactions are recorded on the correct dates. Learning Objective 8 Link the eight general balancerelated audit objectives to management assertions for account balances. General Balance-related Audit Objectives Existence Amounts included exist Completeness Existing amounts are included Accuracy Amounts included are stated at the correct amounts General Balance-related Audit Objectives Classification Amounts are properly classified Cutoff Transactions are recorded in the proper period Detail tie-in Account balances agree with master file amounts, and with the general ledger General Balance-related Audit Objectives Realizable value Assets are included at estimated realizable value Rights and obligations Assets must be owned Hillsburg Hardware Co. (Applied to Inventory) Management Assertions About Account Balances General Balance- Specific Balance-related Audit related Audit Objectives Applied to Inventory Objectives Existence Existence All recorded inventory exists at the balance sheet date Completeness Completeness All existing inventory has been counted and included in the inventory summary Hillsburg Hardware Co. (Applied to Inventory) Management Assertions About Account Balances General Balance- Specific Balance-related Audit related Audit Objectives Applied to Inventory Objectives Valuation and allocation Accuracy Inventory quantities on the client’s perpetual records agree with items physically on hand Prices used to value inventories are materially correct Extensions of price times quantity are correct and details are correctly added Hillsburg Hardware Co. (Applied to Inventory) Management Assertions About Account Balances General Balance- Specific Balance-related Audit related Audit Objectives Applied to Inventory Objectives Valuation and allocation Classification Cutoff Inventory items are properly classified as to raw materials, work in process, and finished goods Purchase cutoff at year end is proper Sales cutoff at year end is proper Hillsburg Hardware Co. (Applied to Inventory) Management Assertions About Account Balances General Balance- Specific Balance-related Audit related Audit Objectives Applied to Inventory Objectives Valuation and allocation Detail tie-in Realizable value Rights and obligations Rights and obligations Total of inventory items agrees with general ledger Inventories have been written down where net realizable value is impaired The company has title to all inventory items listed Inventories are not pledged as collateral Learning Objective 9 Link the four presentation and disclosure-related audit objectives to management assertions for presentation and disclosure. Hillsburg Hardware Co. (Applied to Notes Payable) Management Assertions About Presentation and Disclosure General Presentationand Disclosurerelated Audit Objectives Specific Presentation and Disclosure-related Audit Objectives Applied to Notes Payable Occurrence and rights and obligations Occurrence and rights and obligations Notes payable as described in the footnotes exist and are obligations of the company Completeness Completeness All required disclosures related to notes payable are included in the financial statement footnotes Hillsburg Hardware Co. (Applied to Notes Payable) Management Assertions About Presentation and Disclosure General Presentationand Disclosurerelated Audit Objectives Specific Presentation and Disclosure-related Audit Objectives Applied to Notes Payable Valuation and allocation Valuation and allocation Footnote disclosures related to notes payable are accurate. Classification Classification Notes payable are appropriately and and classified as to short-term and understandability understandability long-term obligations and related financial statement disclosures are understandable Learning Objective 10 Explain the relationship between audit objectives and the accumulation of audit evidence. How Audit Objectives Are Met The auditor must obtain sufficient appropriate audit evidence to support all management assertions in the financial statements.  An audit process has four specific phases Four Phases of a Financial Statement Audit Plan and design Phase I an audit approach Phase II Perform tests of controls and substantive tests of transactions Perform analytical procedures and Phase III tests of details of balances Complete the Phase IV audit and issue an audit report

Audit Responsibilities and Objectives, Part 2

Related Documents

Recommended Documents

Description

Related Documents

Free up your schedule!

Take 5 seconds to unlock