Audit Program Design Part Iii

stock-take and entrepot round of drinks The canvas of the livestock and w behousing cycle is intentional to test history counts, processes, and operations. The classes of minutes in this cycle include sales, value of inventory, cost of goods sold, sales returns and grants, and estimates of allowance for slow moving inventory. Tests of Controls and square Tests of legal proceedingTable WK6-1 displays the interrelationships of the transaction related to visit objectives, tests of controls, and of the essence(p) tests of transactions that should be approved during the audit process of Apollo Shoes, Inc. Table WK6-1. memorial memory board Cycle Tests of Controls and all-important(a) Tests of Transactions Audit Design (Arens, Elder, & international angstrom unitere Beasley, 2006) Inventory Apollo Shoes, Inc.Transaction-Related Audit Objectives Tests of Controls Substantive Tests of Transactions Transaction-Related Audit Objective Tests of Controls Substantive Tests of Transactions Inventory as preserve on tags exists (existence). * Select a random sample of tag way outs and identify the tag with that number attached to the actual inventory. * Observe whether movement of inventory takes place during the count. active inventory is counted and tagged, and tags are accounted for to make sure none are missing (completeness). * Examine inventory to make sure it is tagged. * Observe whether movement of inventory takes place during the count. * Inquire as to inventory in other locations. Inventory is counted accurately (accuracy). * Recount clients counts to make sure the record counts are accurate on the tags (also check descriptions and unit of count, such as dozen or gross). * Compare material counts with perpetual inventory chasten file. * enrol clients counts for posterior testing. Inventory is classified the right way on the tags (classification). * Examine inventory descriptions on the tags and compare with the actual inventory for raw material, work-in-process, and finished goods. * Evaluate whether the percent of completion preserve on the tags for work-in-process is reasonable. Information is obtained to make sure sales and inventory purchases are recorded in the proper period (cutoff). * Record in the audit files for subsequent follow-up the last receiving report number used at year-end. * fake sure the inventory for the above item was included in the physical count. The client has rights to inventory recorded on tags (rights). * Inquire about dispatch or customer inventory included on clients premises. * Be alert for inventory that is set aside or curiously marked as indications of non-ownership. uninflected Procedures Analytical procedures can be performed some(prenominal) times during an engagement * In the planning phase to assist in determining the nature, extent, and timing of work to be performed. During the testing phase of the audit in conjunction with the audit procedures, and * Dur ing the completion phase of the audit as a final review for material misstatements for pecuniary problems and to help the attender take a final objective look at the financial statements that have been audited (Arens, Elder, & Beasley, 2006, p. 208). Arens, Elder, and Beasley (2006) explain that one of the most important analytical procedures for uncovering misstatements of the Inventory and Warehousing Cycle are comparing real with prior year.Analytical procedures for the balance sheet and income statement accounts in the Inventory and Warehousing Cycle are presented in Table WK6-2. Table WK6-2. Inventory and Warehousing Cycle Analytical Procedures (Arens, Elder & Beasley, 2006) interchange Cycle The following(a) tests of controls and substantive tests of transactions for the Cash Cycle discussed by Arens, Elder, and Beasley (2006) are designed to ensure existence, completeness, accuracy, classification, timing, and summarization.Table WK6-3 illustrates the design of tes t of controls and substantive tests of Cash Cycle. Tests of Controls and Substantive Tests of Transactions Cash Apollo Shoes, Inc. Transaction-Related Audit Objectives Tests of Controls Substantive Tests of Transactions Transaction-Related Audit Objective Tests of Controls Substantive Tests of Transactions Cash in the coin blaspheme as stated on the reconciliation exists (existence) * Receipt and tests of a bank confirmation. * Proof account exists and balances are accurate. Existing funds in the bank is recorded (completeness). * Receipt and tests of a cutoff bank statement. * Tests of the bank reconciliation Cash in the bank as stated on the reconciliation is accurate (accuracy). * Tests of the bank reconciliation. * wide tests of the bank reconciliation. * Tests for kiting. * Proof of specie. Cash in the bank is properly presented and disclose (presentation and disclosure). * Examine minutes, loan agreements, and obtain confirmation for restrictions on the use of ca sh and compensating balances. * Review financial statements to make sure (a) material savings accounts and certificates of down payment are disclosed separately from cash in the bank,(b) cash restricted to certain uses and compensating balances are adequately disclosed, and (c) bank overdrafts are included as current liabilities. Cash receipts and cash disbursements transactions are recorded in the proper period (cutoff). * Cash receiptsCount the cash on hand on the last daytime of the year and by and by trace to deposits in transit and the cash receipts journal. Cash disbursementsRecord the last check number used on the last day of the year and subsequently trace to the outstanding checks and the cash disbursements journal * cast deposits in transit to subsequent period bank statement (cutoff bank statement). * Trace outstanding checks to subsequent period bank statement. Table WK6-3. Cash Cycle Tests of Controls and Substantive Tests of Transactions Audit Design (Arens, Eld er, & Beasley, 2006) Analytical Procedures Analytical procedures for the balance sheet and income statement accounts in the Cash Cycle are presented in Table WK6-4.Table WK6-4 Cash Cycle Analytical Procedures (Arens, Elder, & Beasley, 2006) References Arens, A. A. , Elder, R. J. , & Beasley, M. S. (2006). Auditing and assurance services an integrated approach (11th ed. ). Upper blame River, NJ Pearson. Louwers, T. J. , & Reynolds, J. K. (2007). Apollo shoes, inc. An audit case to accompany auditing and assurance services. University of phoenix Custom Edition e-Text. New York, NY McGraw-Hill/Irwin. Retrieved from University of Phoenix,ACC546 Auditing website.