Taylor, CPA, is engaged in the audit of Rex Wholesaling for
Not what you're looking for?
Taylor, CPA, is engaged in the audit of Rex Wholesaling for the year ended December 31. Taylor obtained an understanding of internal control relating to the purchasing, receiving, trade accounts payable, and cash disbursement cycles and has decided not to proceed with tests of controls. Based upon analytical procedures, Taylor believe that the trade accounts payable on the balance sheet as of December 31 may be understated.
Taylor requested and obtained a client-prepared trade accounts payable schedule listing the total amount owed to each vendor.
What additional substantive audit procedures should Taylor apply in examining the trade accounts payable?
Purchase this Solution
Solution Summary
Taylor, CPA, is engaged in the audit of Rex Wholesaling for the year ended December 31. Taylor obtained an understanding of internal control relating to the purchasing, receiving, trade accounts payable, and cash disbursement cycles and has decided not to proceed with tests of controls. Based upon analytical procedures, Taylor believe that the trade accounts payable on the balance sheet as of December 31 may be understated.
Taylor requested and obtained a client-prepared trade accounts payable schedule listing the total amount owed to each vendor.
What additional substantive audit procedures should Taylor apply in examining the trade accounts payable?
Solution Preview
This is how I would handle this problem, from an auditor's perspective:
Taylor requested and obtained a client-prepared trade accounts payable schedule that lists the total amount owed to each vendor, and should also perform several substantive tests for the trade accounts payable. Several of the tests that the auditor should perform include the following:
(1) He should tie in the general ledger accounts payable listing to the external documentation from the client. The two should have no discrepancies.
(2) The auditor should examine the vendor statements to ensure that they match the client prepared trade accounts payable ...
Purchase this Solution
Free BrainMass Quizzes
Introduction to Finance
This quiz test introductory finance topics.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Team Development Strategies
This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Motivation
This tests some key elements of major motivation theories.