Fixed Assets, Inventory, and Accounts Receivable Audit - Assignment Example

Obtain from the client a summary of fixed assets and related depreciation showing the following information:

f. Asset balance at the end of the year
g. Depreciation method (Straight line ) and estimated depreciable life (economic lives)
h. Accumulated depreciation balance at the beginning of the year
i. Current year additions to aggregate accumulated depreciation accounts
j. current year changes to accumulated depreciation accounts (reclassification)
k. Accumulated balance depreciation at the end of the year
3 Add the net book value of the asset to the accumulated depreciation if they add up to the cost of the asset at the beginning of the year.

INVENTORY AUDIT PROGRAM (PROCEDURE)

1.     Obtain an understanding of the procedures used by

 the client to summarize, reconcile and value the inventory and

test  the following count procedure:

 (the inventory sample was selected through a systematic sampling of picking every third inventory item i.e. item no. 137225, 123456, 133112, 139662….)

This kind of sampling is used because it is unbiased.

a.      On a test basis, trace tag sequences of used, unused, voided, and damaged tags in the final inventory listing summary and ascertain consistent treatment. Investigate any tags that have been added or deleted.

b.     Trace test counts noted during the observation of the physical inventory to the final inventory listing summary and investigate any differences.

c.      Test the arithmetical accuracy of the final inventory listing summary concerning quantities, cost per unit, and the total cost.

d reconcile the inventory count to the general ledger

e Test high-value items

f Test error-prone items

g d. Trace confirmation of inventory items held by third parties to the final inventory listing summary.

ACCOUNTS RECEIVABLE AUDIT PROGRAM (PROCEDURE)

1 Obtain from the client an aged trial balance of trade accounts

 receivable and perform the following:

a.      Trace the trade receivable list to the general ledger

b.     Test the arithmetical accuracy of the aged trial balance and the aging categories therein.

c.      Calculate receivable report listing

.

d.     Test invoices listed in the receivable listing

e.      Confirm accounts receivable

f.      Review the cash receipts

g.     Asses the allowance for doubtful debts accounts.

d.     Summarize the total of credit balances and make appropriate reclassification entries, if material.

e.      On a selective basis, trace individual account balances in the aged trial balance to individual subsidiary ledgers and vice versa.

f.      Determine which accounts receivable should be confirmed

(For example, all individually significant items and judgmentally or randomly selected items from the remaining balance).