CompletingtheTestsintheAcquisition(英文版)

1、2003 Prentice Hall Business Publishing, Auditing and Assurance Services 9/e, Arens/Elder/Beasley 19 - 1Completing the Testsin the Acquisitionand Payment CycleChapter 1919 - 2Accounts Associated with Acquisitionand Payment Cycle TransactionsAssetsCashInventorySupplies Property, plant, and equipmentPa

2、tents, trademarks, and copyrightsPrepaid rentPrepaid taxesPrepaid insurance19 - 3Accounts Associated with Acquisitionand Payment Cycle TransactionsCost of goods soldRent expenseProperty taxesIncome tax expenseInsurance expenseProfessional feesRetirement benefitsUtilitiesExpenses19 - 4Accounts Associ

3、ated with Acquisitionand Payment Cycle TransactionsAccounts payableRent payableAccrued professional feesAccrued property taxesOther accrued expensesIncome taxes payableLiabilities19 - 5Methodology for Designing Tests ofBalances Other AccountsIdentify client business risksaffecting other accounts.Set

4、 tolerable misstatementand assess inherent riskfor accounts.Assess control risk for accounts.19 - 6Methodology for Designing Tests ofBalances Other AccountsDesign and perform tests ofcontrols and substantive testsof transactions for theacquisition and payment cycle.Design and perform analyticalproce

5、dures for theacquisition and payment cycle.19 - 7Methodology for Designing Tests ofBalances Other AccountsDesign tests of details ofaccount balances tosatisfy balance-relatedaudit objectives.Audit proceduresSample sizeItems to selectTiming19 - 8Classification of Property, Plant,and Equipment Account

6、s Land and land improvements Building and building improvements Manufacturing equipment Furniture and fixtures Autos and trucks Leasehold improvements Construction-in-process for property,plant, and equipment19 - 9Manufacturing Equipmentand Related Accounts Manufacturing EquipmentAccumulatedDeprecia

7、tedBeginningbalanceBeginningbalanceGain or Losson DisposalsDepreciationExpenseCurrent perioddepreciationEndingbalanceDisposalsDisposalsAcquisitions19 - 10Auditing Manufacturing Equipmentand Related AccountsAnalytical proceduresCurrent year disposalsEnding balance in the asset accountDepreciation exp

8、enseEnding balance in accumulated depreciationCurrent year acquisitions19 - 11Analytical Procedures for Manufacturing EquipmentAnalytical ProcedurePossible MisstatementCompare depreciationMisstatement inexpense divided by grossdepreciation expensemanufacturing equipmentand accumulatedcost with previ

9、ous years.depreciationCompare accumulatedMisstatement indepreciation divided by grossaccumulatedmanufacturing equipmentdepreciationcost with previous years.19 - 12Analytical Procedures for Manufacturing EquipmentAnalytical ProcedurePossible MisstatementCompare monthly or annualExpensing amountsrepai

10、rs and maintenance,that should besupplies expense, small toolscapitalizedexpense, and similar accountswith previous years.Compare gross manufacturingIdle equipment orcost divided by some measureequipment that hasof production with previousbeen disposed of, butyears.not written off.19 - 13Verifying C

11、urrent Year AcquisitionsThe proper recording of current year additionsis important because of the long-term effectthe assets have on the financial statements.Because of the importance of current periodacquisitions, seven of the nine balance-relatedaudit objectives are used as a frame of reference.19

12、 - 14Existing acquisitions are recorded.Major Balance-RelatedAudit ObjectivesCompleteness1. Examine vendors invoices of closely relatedaccounts to uncover items that should bemanufacturing equipment.2. Review lease and rental agreements.19 - 15Current year acquisitions as listed are accurate.Major B

13、alance-RelatedAudit ObjectivesAccuracy1. Examine vendors invoices.19 - 16Current year acquisitions aslisted are properly classified.Major Balance-RelatedAudit ObjectivesClassificationExamine:1. Vendors invoices in mfg. equipment account.2. Vendors invoices of closely related accounts.3. Rent and lea

14、se expense for capitalizable leases.19 - 17Verifying Current Year DisposalsReview whether newly acquired assets replace existing assets.Analyze gains and losses on disposal.Review documents for indicationsof deletion of equipment.Make inquiries about the possibilityof the disposal of assets.19 - 18V

15、erifying Ending Balanceof Asset Accounts1. All equipment owned is recorded.2. All recorded equipment physically 3. exists on the balance sheet date.19 - 19Verifying Depreciation ExpenseThe most important objective is accuracy.ConsistentdepreciationpolicyCorrectcalculations19 - 20Verifying Ending Bal

16、ance in Accumulated Depreciation1. Accumulated depreciation as statedin the property master file agreeswith the general ledger.2. Accumulated depreciation in themaster file is accurate.19 - 21Audit of Prepaid Expenses Prepaid rent Organization cost Prepaid taxes Patents Prepaid insurance Trademarks

17、Deferred charges Copyrights19 - 22Prepaid Insuranceand Related AccountsPrepaid InsuranceInsurance ExpenseBeginning balanceCurrent period insurance expenseAcquisitionsEnding balance19 - 23Prepaid InsuranceInternal Controls1. Controls over the acquisition andrecording of insurance2. Controls over the

18、insurance register3. Controls over the charge-off ofinsurance expense19 - 24Prepaid InsuranceAudit TestsCompare total prepaid insurance and insuranceexpense with previous years.Compute the ratio of prepaid insurance to insuranceexpense and compare it with previous years.Compare the individual insura

19、nce policy coverageon the schedule of insurance obtained with thepreceding years schedule.19 - 25Prepaid InsuranceAudit TestsCompare the computed prepaid insurance balancefor the current year on a policy-by-policy basiswith that of the preceding year.Review the insurance coverage listed on theprepai

20、d insurance schedule with an appropriateclient official or insurance broker.19 - 26Balance-RelatedAudit ObjectivesExistence andCompletenessInsurance policiesin the prepaidinsurance scheduleexist and existingpolicies are listed.RightsThe client has rightsto all insurancepolicies in theprepaid insuran

21、ceschedule.19 - 27Balance-RelatedAudit ObjectivesAccuracy andDetail tie-inPrepaid amounts areaccurate and the totalis correctly addedand agrees withthe general ledger.ClassificationInsurance expense isproperly classified.19 - 28Balance-RelatedAudit ObjectivesCutoffInsurancetransactionsare recorded i

22、nthe proper period.Presentationand DisclosurePrepaid insurance isproperly presentedand disclosed.19 - 29Audit of Accrued Liabilities Accrued income taxes Accrued interest Accrued pension costs Accrued professional fees Accrued rent Accrued warranty costs19 - 30Accrued Property Taxesand Related Accou

23、ntsAccrued Property TaxesProperty Tax ExpenseBeginning balancePaymentsCurrent period(property taxes) property tax expenseEnding balance19 - 31Approach to Auditing Income and Expense AccountsAnalytical proceduresTests of controls and substantivetests of transactionsTests of details of account balance

24、s19 - 32Analytical Procedures for Income and Expense AccountsAnalytical ProcedurePossible MisstatementCompare individualOverstatement orexpenses with previousunderstatement of ayear.balance in an expensesheet.19 - 33Analytical Procedures for Income and Expense AccountsAnalytical ProcedurePossible Mi

25、sstatementCompare individual assetOverstatement orand liability balances withunderstatement of aprevious years.balance sheet accountthat would also affectan income statementaccount19 - 34Analytical Procedures for Income and Expense AccountsAnalytical ProcedurePossible MisstatementCompare individualM

26、isstatement ofexpenses with budgets.expenses and relatedbalance sheetaccountsCompare gross marginMisstatement of costpercentage with previousof goods sold andyears.inventory19 - 35Analytical Procedures for Income and Expense AccountsAnalytical ProcedurePossible MisstatementCompare inventoryMisstatem

27、ent of costturnover ratio withof goods sold andprevious years.inventoryCompare prepaid insuranceMisstatement ofexpense with previousinsurance expenseyears.and prepaid insurance19 - 36Analytical Procedures for Income and Expense AccountsAnalytical ProcedurePossible MisstatementCompare commissionMisstatement ofexpense divided by salescommission expense,with previous years.accrued commissionsCompare individualMisstatement ofmanufacturing expensesindividual mfg.divided by total mfg.expenses and relatedexpenses with previous years. balance sheet accounts19 - 37T