Share
Explore BrainMass

You are a new auditor for B&O LLP, a large public accounting

You are a new auditor for B&O LLP, a large public accounting firm with many
publicly traded audit clients. You have just been assigned to perform controls testing
for the integrated audit on one of B&O's largest clients. One of the steps specified
in your audit program is to test the review process over cash disbursements
performed by the company's supervisor.
Required:
(a) Is inquiry the best way to test the control? If yes, why? If no, why not?
(b)Will inquiry provide sufficient audit evidence? Explain.
(c) Is inspection the best way to test the control? If yes, why? If no, why not?
(d) Is reperformance the best way to test the control? If yes, why? If no, why not?
(e) List the audit procedures you would perform to sufficiently test the control.

Solution Preview

(a) Is inquiry the best way to test the control? If yes, why? If no, why not? - Inquiry is not the best way to test the control. Inquiry will provide excellent insight for the auditor into how the internal control environment is set up and functioning at the company, and should be used as a source of information, but not as a means of testing.

(b)Will inquiry provide sufficient audit evidence? Explain. No. Inquiry will provide a good foundation, and will also provide information to the auditor to indicate how the auditor may be able to create the most effective tests, based on the results of the inquiry. It will provide audit evidence, but an inquiry will not provide sufficient audit ...

Solution Summary

You are a new auditor for B&O LLP, a large public accounting firm with many
publicly traded audit clients. You have just been assigned to perform controls testing
for the integrated audit on one of B&O's largest clients. One of the steps specified
in your audit program is to test the review process over cash disbursements
performed by the company's supervisor.
Required:
(a) Is inquiry the best way to test the control? If yes, why? If no, why not?
(b)Will inquiry provide sufficient audit evidence? Explain.
(c) Is inspection the best way to test the control? If yes, why? If no, why not?
(d) Is reperformance the best way to test the control? If yes, why? If no, why not?
(e) List the audit procedures you would perform to sufficiently test the control.

$2.19