Exam 16: Audit of Transaction Cycles and Financial Statement Balances II

The procedure of comparing the total balance in loans payable, interest expense and accrued interest with the prior year is to identify possible misstatements of interest expense, accrued interest or loans payable.

Banks are responsible for searching their records for bank balances or loans beyond those included on the confirmation form.

The audit objectives for tests of cash balances are completeness, accuracy and cutoff.

The bank reconciliation should be completed by someone with primary responsibility for cash receipts and payments.

The audit procedure 'Examine due dates on duplicate copies of loans payable to determine whether all or part of the loans are a noncurrent liability' is performed when verifying the classification objective for loans payable.

The cash balance is immaterial in many audits, but cash transactions affecting the balance are almost always extremely material.

Which one of the following errors would be LEAST likely to be discovered during the tests of the bank reconciliation?

Information typically confirmed on liabilities to the bank includes:

Cash balance is important in the audit because of:

The emphasis in auditing property, plant and equipment is on the verification of:

The audit procedure 'foot the schedule of fixed assets acquisitions and trace the total to the general ledger' relates most closely to the accuracy objective for fixed assets acquisitions.

The audit objective to determine that existing loans payable are included in the loans payable schedule (completeness) is accomplished by the following test of balances procedure:

The audit procedure which requires the auditor to record the last cheque number used on the last day of the year and subsequently trace to the outstanding cheques and the cash payments journal is performed to satisfy the audit objective of:

While analytical procedures are commonly used when auditing prepaid expenses and deferred charges, they are rarely sufficient in themselves.

Information typically confirmed on liabilities to the bank includes:

Discuss the internal controls related to owners' equity that are of concern to the auditor.

Information typically confirmed on liabilities to the bank would NOT include:

What are the most important objectives when auditing dividends payable?

The test of details of balances procedure for PPE which requires 'examination of vendor's invoices and land titles and deeds' is done to satisfy the audit objective of:

State the four most important audit objectives for share capital and describe how the auditor typically verifies each of the four objectives.