Adapted AICPA Task-Based Simulation For each of the procedures described in the

Question

Adapted AICPA Task-Based Simulation
For each of the procedures described in the table below, identify the audit procedure per­ formed and classification of the audit procedure using the following:

Audit Procedures:                                                                            Classification of Audit Procedure
(I)   Analytical procedure                                                                 (9)   Substantive procedures
(2)   Confirmation                                                                             (I0) Test of controls
(3)   Inquiry
(4)   Inspection of recordsordocuments
(5)   Inspection of tangible assets
(6)   Observation
(7)   Recalculation
(8)   Reperformance

Procedure                                                                                                     Audit Procedure                                                                   Classification of Audit Procedure
Requested responses directly from customers as to amounts due.
Compared total bad debts this year with the totals for the previoustwo years.
Compared total bad debts this year with the totals for the previous two years.
Questioned management about likely total uncollectible accounts.
Watched the accounting clerk record the daily deposit of cash receipts.
Examined invoice to obtain evidence in support of the ending recorded balance of a customer.
Compared a sample of sales invoices to credit files to determine whether the customers were on the approved customer list.
Examined a sample of sales invoices to see if they were initialized by the credit manager indicating credit approval.

Explanation / Answer

Audit Procedures Classification of Audit Procedures Requested responses directly from customers as to amount due Inquiry Test of Controls Compared Total Bad Debts this year with the totals for the previous two years Analytical Procedure Substantive Procedures Questioned Management about likely total uncollectible accounts Confirmation Substantive Procedures Watched the accounting clerk record the daily deposit of cash receipts Inspection of Records or documents Substantive Procedures Examined Invoice to obtain Evidence in support of the ending recorded balance of a customer. Recalculation Test of Controls Compared a sample of sales invoices to credit files to determine whether the customers were on the approved customer list. Observation Test of Controls Examined a sample of sales invoices to see if they were initialised by the credit manager indicating credit approval Reperformance Test of Controls

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