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ISA 230 - Audit Documentation Requires That Documentation of Audit Work

This document provides tutorial questions for an auditing course. It asks students to: 1) Identify the three objectives of audit documentation requirements. 2) Classify audit procedures as different types of evidence. 3) Identify five key elements that should be included in audit documentation and why. 4) Describe the four audit evidence decisions an auditor makes regarding nature, timing, and extent.

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Priscella Llewellyn
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52 views

ISA 230 - Audit Documentation Requires That Documentation of Audit Work

This document provides tutorial questions for an auditing course. It asks students to: 1) Identify the three objectives of audit documentation requirements. 2) Classify audit procedures as different types of evidence. 3) Identify five key elements that should be included in audit documentation and why. 4) Describe the four audit evidence decisions an auditor makes regarding nature, timing, and extent.

Uploaded by

Priscella Llewellyn
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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University of the West Indies, Mona

Department of Management Studies


ACCT 3043 – Auditing I

TUTORIAL QUESTIONS 5

1. ISA 230 – Audit Documentation requires that documentation of audit work


contain sufficient information to enable an experienced auditor not involved with the
engagement to achieve three (3) objectives. What are those objectives? (3 marks)

2. Classify each of the following audit procedures according to the types of audit evidence:
i. Review the accounts receivable with the credit manager to evaluate their
collectability
ii. Compare a duplicate sales invoice with the sales journal for customer name and
account.
iii. Add the sales journal entries to determine whether they were correctly totaled.
iv. Count inventory items and record the amounts in the audit files.
v. Obtain a letter from the insurance company to the audit firm stating the amount of
fire insurance coverage on building and equipment
vi. Calculate the ratio of sales commission expense to sales as a test of sales
commission.
vii. Trace a sample of copy sales invoices to determine if the accountant’s approval is
included and trace copy sales invoice to the sales journal for agreement of name
and amount.
viii. Foot the sales journal and compare the total to the general ledger.
(8 marks)

3. Identify FIVE key elements to be included in audit documentation and explain why its
important that each is included in the documentation. (5 marks)

4. The auditor’s decisions regarding evidence accumulation can be broken into four sub-
decisions. Identify and discuss the audit evidence decisions that the auditor makes,
including reference to nature, timing and extent. (10 marks)

5. Explain the difference between negative and positive confirmation? (4 marks)

6. Describe how the use of audit data analytics might increase both the
effectiveness and efficiency of the audit. (2 marks)

7. What are some Ethical considerations the Accountant must manage that may
results from the use of AI/algorithms? (5 marks)

8. What is meant by substantive procedures and identify the two types (3 marks)

9. Which of the 8 types of audit procedures can only be used as substantive


procedures? (2 marks)

10. Distinguish between vouching and tracing. (2 marks)

1
11. Outline the steps to be taken to perform substantive analytical procedure. (4
marks)

12. Explain the factors the audit should consider when using analytical procedures (4
marks)

13. Uptown Looks Ltd (Uptown) is an interior design company with offices in two
parishes. You are conducting the audit for the year ended 30 Sept 2019 and the
following came to your attention:
On 1 Jan 2019, the client took out a loan to fund expansion into two additional parishes.
The following information is available in relation to the loan:
Finance charges in the Income Statement $810,000
Opening loan balance on 1 Jan 2019 $4,000,000

The loan has a fixed interest rate of 2% per month and interest is paid at the end of the
month. Uptown repaid capital of $500,000 on 1 April 2019.

Required:
Perform analytical procedures to verify the finance charge. What is the expected finance
charge on the loan for the year ended 30 Sept 2019 and the resulting impact on the
profit for the period? (5 marks)

a) Finance charge should be $60,000; profit is overstated


b) Finance charge should be $720,000; profit is understated
c) Finance charge should be $670,000; profit is understated
d) Finance charge should be $660,000; profit is understated

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