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    Situation Analysis Instructions: Read and Analyze The Situation Below. Answer The Following Items On The Space Provided

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    Argie Mae Salvador
    Louie, a CPA, is auditing the financial statements of Judah Company for the year ending December 31, 201A. Louie obtained an understanding of internal controls related to purchasing and set control risk at the maximum level. Louie requested and received a schedule of prepaid insurance from Judah as of December 31, 201A and sent a confirmation request to Judah's insurance broker. To verify the schedule, Louie should examine supporting documents, confirm the policy with the broker, check with the insurance company, determine the expired and unexpired portions of the policy, and ensure proper financial statement presentation and disclosure. The audit evidence gathered is important because it allows the auditor to form an opinion on the financial statements and

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    Situation Analysis Instructions: Read and Analyze The Situation Below. Answer The Following Items On The Space Provided

    Uploaded by

    Argie Mae Salvador
    186 views1 page
    Louie, a CPA, is auditing the financial statements of Judah Company for the year ending December 31, 201A. Louie obtained an understanding of internal controls related to purchasing and set control risk at the maximum level. Louie requested and received a schedule of prepaid insurance from Judah as of December 31, 201A and sent a confirmation request to Judah's insurance broker. To verify the schedule, Louie should examine supporting documents, confirm the policy with the broker, check with the insurance company, determine the expired and unexpired portions of the policy, and ensure proper financial statement presentation and disclosure. The audit evidence gathered is important because it allows the auditor to form an opinion on the financial statements and

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    it is an activity cover the topic under of Auditing

    Original Title

    PF09_Activity_1_AAP

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    Louie, a CPA, is auditing the financial statements of Judah Company for the year ending December 31, 201A. Louie obtained an understanding of internal controls related to purchasing and set control risk at the maximum level. Louie requested and received a schedule of prepaid insurance from Judah as of December 31, 201A and sent a confirmation request to Judah's insurance broker. To verify the schedule, Louie should examine supporting documents, confirm the policy with the broker, check with the insurance company, determine the expired and unexpired portions of the policy, and ensure proper financial statement presentation and disclosure. The audit evidence gathered is important because it allows the auditor to form an opinion on the financial statements and

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    186 views1 page

    Situation Analysis Instructions: Read and Analyze The Situation Below. Answer The Following Items On The Space Provided

    Uploaded by

    Argie Mae Salvador
    Louie, a CPA, is auditing the financial statements of Judah Company for the year ending December 31, 201A. Louie obtained an understanding of internal controls related to purchasing and set control risk at the maximum level. Louie requested and received a schedule of prepaid insurance from Judah as of December 31, 201A and sent a confirmation request to Judah's insurance broker. To verify the schedule, Louie should examine supporting documents, confirm the policy with the broker, check with the insurance company, determine the expired and unexpired portions of the policy, and ensure proper financial statement presentation and disclosure. The audit evidence gathered is important because it allows the auditor to form an opinion on the financial statements and

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    SITUATION

    Instructions: Read and analyze the situation below. Answer the following items on the space provided.

    Louie, a CPA, is engaged to audit the financial statements of Judah Company for the year ended December
    31, 201A. Louie obtained and documented an understanding of internal control relating to the purchasing
    process and set control risk at the maximum level. Louie requested and obtained from Judah a schedule
    analyzing prepaid insurance as of December 31, 201A, and sent confirmation request to Judah’s broker.

    a. What substantive procedures should Louie conduct in verifying the schedule of prepaid insurance and to
    respond appropriately to the following assertions?
    1) Existence and completeness -- Examine supporting source documentation and confirm policy with
    insurance broker.

    2) Rights and obligations -- Check with the insurance company to make sure the policy beneficiary is
    right.

    3) Valuation or allocation --Determine the part of the policy that hasn't expired and the cost of
    insurance.

    4) Presentation and disclosure – Determine if the overall presentation of the financial statements,
    including relevant disclosure, complies with the applicable financial reporting framework.

    b. What is the importance of the audit evidence gathered from the audit procedures?

    Audit evidence is significant because it includes all of the information gathered by an auditor in
    order to form an audit opinion on an organization's financial statements and/or internal control
    environment. It is important to the audit and internal controls processes because it helps public
    corporate executives to trust the opinions of their auditors. A number of policies and guidelines
    state unequivocally that it is the executives of public corporations, not the auditors, who are
    responsible for maintaining internal control over financial statements, as well as determining the
    efficacy of such internal controls.

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