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Audit Procedures

The document outlines auditing procedures for students to follow, including requirements to review corporate bylaws and accounts, draft an engagement letter, prepare audit programs and internal control questionnaires, prove balances and footings, reconcile cash and bank accounts, verify accounts receivable and payable, inventory counts, investments, property and equipment, stockholders' equity, revenue and expenses, and prepare audited financial statements and tax returns. The procedures involve tracing accounts, vouching supporting documentation, reconciling balances, and preparing various required audit documents and financial statements.

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Gerald Piol
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87 views4 pages

Audit Procedures

The document outlines auditing procedures for students to follow, including requirements to review corporate bylaws and accounts, draft an engagement letter, prepare audit programs and internal control questionnaires, prove balances and footings, reconcile cash and bank accounts, verify accounts receivable and payable, inventory counts, investments, property and equipment, stockholders' equity, revenue and expenses, and prepare audited financial statements and tax returns. The procedures involve tracing accounts, vouching supporting documentation, reconciling balances, and preparing various required audit documents and financial statements.

Uploaded by

Gerald Piol
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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AUDITING PROCEDURES

1) Require the students to read

a. Corporate by laws
b. Scan the books of accounts of available supporting records
c. Draft an engagement letter address to the client
d. Prepare audit programs for major accounts
e. Prepare Internal control questionnaire for major accounts
f. All the prior balance on the Trial Balance (TB) and General Ledger (GL)
1. Foot
2. Trace from Trial Balance (TB) to General Ledger (GL)
3. Trace General Ledger (GL) to (Trial Balance)
4. Prove mathematical accuracy of General Ledger accounts

2) Cash General

1. Prove mathematical accuracy of

a. Cash Receipts Books (CRB)


b. Cash Disbursement Books (CDB)

2. Trace postings from Cash Receipts Books (CRB) and Cash Disbursement Books (CDB) to the

General Ledger.

3. Vouch the Official receipts supporting Cash Receipts Disbursement (CRB).

4. Vouch cash vouchers supporting Cash Disbursement Books (CDB).

5. Vouch posting in the cash accounts other than those from the Cash Receipts Books (CRB) and

Cash Disbursement Books (CDB).

6. Conduct a cash count


- Accomplish a cash count form and have it acknowledge by the cash custodian

7. Prepare a bank reconciliation dated December 31, 2019.


a. To determine outstanding checks on Dec. 31, 2019 tick mark checks paid by

bank in December 2019, against outstanding checks in November 30, 2019 bank
reconciliation and December Cash Disbursement Book (CDB).

b. To determine deposit in transit on Dec. 31, 2019 tick marks Dec. 2019
deposit per bank against deposit in transit in the Nov. 30, 2018 bank reconciliation
and
Cash Receipt Book (CRB) December.

c. Examine supporting Debit Memos (DM) and Credit Memos (CM)


d. From the December 2019 bank statement copy December 31 balance per

bank and from the General Ledger cash account, copy the balance per book.

e. Complete the December 31 bank reconciliation bank statement.

3) Account Receivable

1. Prove the mathematical accuracy of the sales book.

2. Trace posting of sales book totals to the general ledger.

3. Trace Official Receipts (OR) posting to Accounts Receivable (AR) Subsidiary ledgers.

4. Trace Sales Invoice Postings to Accounts Receivable subsidiary ledgers.

5. Prove the mathematical accuracy of Accounts Receivable subsidiary ledgers.

6. Make an Accounts Receivable aging schedule.

7. Summarize the result of Accounts Receivable conformation.

8. Reconcile the total aging with the balance in the General Ledger.

9. Determine the adequacy of the allowance for bad debts.

10. Post to the Accounts Receivable conformation working papers subsequent collections of
Accounts Receivable.

4) Inventories

1. Prove postings from purchase invoice to stock cards.


2. Prove Postings from sales invoice to stock cards.
3. Compose Official Receipt and Sales Invoice.
4. Prove the footings of Inventory list.
5. Test Pricing.
6. Prove extension.
7. Trace count ship to inventory list.
8. Trace inventory list to count ship.
9. Trace inventory list to stock cards.
10. Trace stock cards to inventory list.
11. Summarize errors in the error sheet.

5) Investment

1. Vouch Investments.
2. Verify income against dividend declarations.
3. Reconcile with the general ledger investment balance.

6) Property Plant and Equipment


1. Vouch the three groups of accounts:
a. Property Plant and Equipment (PPE)
b. Depreciation
c. Accumulated Depreciation

2. Make independent computation of depreciation and accumulated depreciation and compare


with the book balance.
3. Prepare necessary adjusting entries.

7) (A) Accounts Payable

1. Prove the mathematical accuracy of the purchase books.


2. Trace postings of purchase books total to General Ledger.
3. Trace CB postings to Accounts Payable subsidiary ledgers.
4. Trace invoice posting to the Accounts Payable subsidiary ledgers.
5. Prove the mathematical accuracy of the Accounts Payable subsidiary ledger.
6. Make a schedule of Accounts Payable.
7. Reconcile the total of Accounts Payable subsidiary ledger with the General Ledger (GL)
account.
8. Post subsequent payments on Accounts Payable.

(B) Notes Receivable & Notes Payable

1. Examine promissory notes.


2. Reconcile with general ledger balances.
3. Accrue or defer interest income or interest expense.

8) Stockholders’ Equity

1. Trace from articles of incorporation to the stock and transfer books the original subscription.
2. Follow through postings in the General Ledger (GL) Capital Stock (CS) and subscribe capital
stock and subscription receivables to the stock and transfer proof.
3. Examine the minutes of meetings for declamation of dividends.

9) Revenue and Expenses

1. Vouch
a. Organization cost.
b. Salaries and wages or payable
c. Taxes and Licenses
d. Advertising
e. Insurance

2. Analyze
a. Cost of Goods Sold
b. Sales

10) Prepare Audited Financial Statement

1. Prepare working balance sheet


2. Prepare working income statement
3. Prepare:
a. Balance Sheet
b. Income Statement
c. Statement of Changes in Equity
d. Cash Flow Statement
e. Notes to Financial Statement

11) Prepare the Audit Record


1. Prepare Income Tax Return

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