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Types of Audit Tests

The following are 11 audit procedures taken from an audit program.

1. Foot the accounts payable trial balance and compare the total with the general ledger.
2. Examine vendors' invoices to verify the ending balance an accounts payable
3. Compare the balance in payroll tax expense with previous years. The comparison takes the increase in payroll tax rates into account.
4. Discuss the duties of the cash disbursements clerk with him and observe whether he has responsibility for handling cash or preparing the bank reconciliation.
5. Confirm accounts payable balances directly with vendors.
6. Account for a sequence of checks in the cash disbursements journal to determine whether any have been omitted
7. Examine the internal auditor's initials on monthly bank reconciliations as an indication of whether they have been reviewed
8. Examine vendors' invoices and other documentation in support of recorded transactions in the acquisitions journal.
9. Multiply the commission rate by total sales and compare the result with commission expense.
10. Examine vendors' invoices and other supporting documents to determine whether large amounts in the repair and maintenance account should be capitalized.
11. Inquire about the accounts payable supervisor's monthly review of a computer-generated exception report of receiving reports and purchase orders that have not been matched with a vendor invoice.

a) Indicate whether each procedure is a test of control, substantive test of transaction, analytical procedure, or a test of details of balances.
b) Identify the type of evidence for each procedure: (physical examination, confirmation, documentation, observation, inquiries of the client, re-performance, or analytical procedures)

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1. Foot the accounts payable trial balance and compare the total with the general ledger.
(a) A test of details of balances;
(b) Confirmation; this is an alternate method of finding out the accuracy of the general ledger.
2. Examine vendors' invoices to verify the ending balance an accounts payable
(a) Substantive test of transaction;
(b) Documentation; the auditor is going back to the original document;
3. Compare the balance in payroll tax expense with previous years. The comparison takes the increase in payroll tax rates into account.
(a) Analytical procedure;
(b) Analytical procedure; the comparison with previous years figures are being made ...

Solution Summary

Types of Audit Tests are discussed very comprehensively in this explanation.

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