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Part 2 Types of Audit Evidence (27 points) I. What is audit evidence, i.e. how does it relate to the auditor' s opinion? II. Classify each of the following according to type of audit evidence: A. Analytical procedures B. Confirmation C. Examination of documents F. Inspection of Assets G. Recalculation H. Reperformance [i.e. Physical examination] or Records D. Inquiry E. Observation I. Scanning Procedures: 1. The auditor performs an internal control procedure (i.e. a walkthrough) to gain an understanding of the client's internal control system. 2. Send letters to customers asking them how much they owe the company 3. Count the cash in the petty cash fund 4. Send lawyer letters to company attorneys asking them about 5. Watch client employees take the physical inventory to see if 6. Examine a check, or image of a check, returned in a bank 7. Check the total shown for the balance in the accounts 8 Auditors review customer balances in the Accounts Receivable possible loss contingencies (Don't use "Confirmation") employees follow company procedures. statement, as support for a recorded expense. receivable subsidiary ledger. Subsidiary Ledger to see if any have credit balances which should be reclassified. accounts receivable determine that customers are being billed test of the reasonableness of revenue 9. Ask the credit manager about the collectability of customer 10. Trace shipping documents to related sales invoices to 11. Compare current year sales to sales for previous years, as a Select only ONE letter for each of the procedures. Letters can be used more than once Answers 7 9 2 10

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