Question

Below are audit procedures for the sales and collection, and acquisition and payments cycles. In each case, indicate the type of audit procedure (e.g. test of control, analytical procedure, substantive test of transactions, or test of details of balances), the transaction-related or balance-related audit objective and type of evidence (e.g. documentation, observation etc.).

1. Trace recorded sales transactions to shipping documents to determine whether a document exists.
2. Obtain a prelisting of cash receipts and trace amounts to the cash receipts journal, testing for names, amounts and dates.
3. Calculate ratios such as purchases divided by accounts payable, and accounts payable divided by current liabilities.
4. Examine sales transactions for any related-party or employee sales that have been recorded as regular sales.
5. Examine supporting documentation for cash payments subsequent to the balance sheet date to determine whether a cash payment was for a current-period liability.
Audit Procedure	Type of Audit Procedure	Audit Objective	Type of Evidence

Question 3 continued next page

Question 3 (continued)

6. Confirm accounts payable, emphasising large and unusual amounts.
7. Trace a sample of accounts from the accounts receivable master file to the aged trial balance.
8. Re-add or use the computer to total the accounts payable master file. Trace the total to the general ledger.
9. Observe whether the accountant reconciles the bank account.
10. Ask management whether there are any non-current receivables included with the accounts receivable balance shown under current assets.
Audit Procedure	Type of Audit Procedure	Audit Objective	Type of Evidence

Answer 1

Audit Procedure Sr. No.	Type of Audit Procedure	Audit Objective	Type of Evidence
1.	Substantive Test of Transactions	Verify Sales are Genuine	Documentation
2.	test of details of balances	Completeness	Documentation
3.	analytical procedure	Reliablity	Documentation
4.	test of control	Classification	Examination
5.	test of control	Classification	Examination
6.	test of details of balances	Accuracy	Documentation
7.	Substantive Test of Transactions	Occurence	Documentation
8.	test of details of balances	Correctness	Re-Performance
9.	test of control	Occurence	Observation
10.	Substantive Test of Transactions	Classification	Enquiry