Audit evidence Phase II

What type of evidence? Select a sample of inventory

items in the factory warehouse

and trace each item to the

inventory count sheets to

determine if it has been included

and if the quantity and

description are correct.

• Observation

• Physical examination

• Confirmation

• Analytical Procedure

• Inquiry

What audit objective does this meet? Select a sample of inventory

items in the factory warehouse

and trace each item to the

inventory count sheets to

determine if it has been included

and if the quantity and

description are correct. (Multiple correct answers)

• Occurrence

• Completeness

• Posting & Summarization

• Accuracy

• Rights & Obligations

What type of evidence? Compare the quantities on hand

and unit prices on this year's

inventory count sheets with

those in the preceding year as a

test for large differences.

• Observation

• Physical examination

• Confirmation

• Analytical Procedure

• Inquiry

What type of evidence? Test the unit prices

times quantity on the inventory

list for a sample of items , test

foot the list and compare the

total to the general ledger.

• Reperformance

• Physical examination

• Confirmation

• Analytical Procedure

• Recalculation

What type of evidence? Send letters directly to third

parties who hold the client's

inventory and request they

respond directly to the auditor.

• Reperformance

• Physical examination

• Confirmation

• Analytical Procedure

• Recalculation

What type of evidence? Examine sales invoices and

contracts with customers to

determine whether any goods

are out on consignment with

customers.

• Reperformance

• Documentation

• Confirmation

• Analytical Procedure

• Inquiry

What audit objective does this meet? Examine sales invoices and

contracts with customers to

determine whether any goods

are out on consignment with

customers.

• Net Realizable Value

• Rights and Obligations

• Completeness

• Posting & Summarization

What audit objective does this meet? Question operating personnel

about the possibility of obsolete

or slow moving inventory.

• Net Realizable Value

• Rights and Obligations

• Completeness

• Posting & Summarization

What type of evidence? Question operating personnel

about the possibility of obsolete

or slow moving inventory.

• Reperformance

• Documentation

• Confirmation

• Analytical Procedure

• Inquiry

The six factors determining the reliability of evidence do not include:

• If the business is a sole proprietor or corporation

• Degree of objectivity

• The independence of the provider

• Effectiveness of clients internal controls

• Timeliness