Audit Evidence: Class Questions - Review 2: In this video, 4.06 – Audit Evidence – Review 2, Roger Philipp, CPA, CGMA, continues with the review of Audit Evidence by going over some CPA Exam-style questions. The first question deals with testing for the management assertion of completeness. Remember that tracing from source documents to the accounting records is the direction in which an auditor will test for completeness, because if the accounting records are incomplete, the auditor will discover nothing by starting with them. Vouching from the accounting records, such as general ledger balances, adjusted trial balances, and general journal entries, is a way for the auditor to test the management assertion of existence or occurrence. Next, Roger discusses a problem about analytical procedures in evaluating an entity’s costs and expenses, reminding us that the income statement is much more suited than the balance sheet for the application of analytical procedures because year-over-year relationships between income statement accounts are much more consistent and predictable than those of balance sheet accounts. After a question about which audit engagement team member would be most likely to conduct review analytical procedures, Roger covers another question on testing management assertions; this time, the assertion of valuation and its relationship to the inventory turnover ratio.
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