_____________________________________part 1 read case 7 – designing substantive audit tests B u s i n e s s F i n a n c e

This is a 2 -part assignment

Student Name: _____________________________________

Part 1

Read Case 7 – Designing Substantive Audit Tests: Compensation Plans

Instructions: Answer all the questions that appear below using the template provided:

Paul Reubens is a new staff auditor recently hired by the firm of Abernethy and Chapman. As one of his initial assignments, he is to perform several audit procedures in the Lakeside engagement. He has already completed a set of payroll tests and prepared the audit document presented in Exhibit 7-1. The firm of Abernethy and Chapman has a policy that the senior (in-charge) auditor on an engagement must review and approve all audit documentation. If errors or problems are found, the audit documents are returned to the staff auditor for appropriate revision. This review process helps to ensure that each audit document provides a clear and complete indication of the procedures that were performed and the evidence that was accumulated.

Analyze the audit document in Exhibit 7-1 as if you were the senior auditor. Prepare a list for Reubens of the errors and problems that are present in his audit document. For each, indicate the reason that the current presentation is not acceptable. Refer to Case 6 for standard audit document content and format.

Case 7 – Exercise 1
The Lakeside Company
Payroll Tests
In-charge Review Comments
December 31, 2012
Prepared by:
Date:
Item on Working Paper	Problem

Part 2

Read Case 8 – Observation of Physical Inventory Count

Instructions: Answer all the questions that appear below using the template (case 8 exercise 1)

provided below:

Mitchell knows that the following three audit objectives related to inventory need to be accomplished:

She assigns these tasks to Paul Reubens, a new staff auditor recently hired by the firm of Abernethy and Chapman. Prepare a step-by-step audit program for Reubens so that he can achieve these three audit objectives.

Case 8 – Exercise 1

Lakeside Company

Audit Program for Inventory Testing – Warehouse

December 31, 2012

Audit program prepared by:

Date:

Procedure Number	Audit Procedure	Procedure Performed by