External Confirmations – NBC Institute

AA – Nov 2022 – L2 – Q4 – Audit Evidence for Engineering Assets and Liabilities

Addressing audit evidence for engineering company assets and liabilities, including procedures for confirmations and plant disposals.

Question

You are part of an audit team engaged on the audit of an engineering company which has a substantial amount of plant and machinery in its books. While reviewing the accounts, you also observed that there were some current assets and liabilities that may require external confirmations.

Required:

a. How would you establish the amount and level of audit evidence required for the current assets and liabilities? (5 Marks)

b. State which procedures will be applied to generate audit evidence in the following scenarios:

i. Confirming the accuracy of figures in the trade receivables account
ii. Confirming that the plant and machinery purchased in the year is actually in use during the year
iii. Ascertaining that the change in performance is in line with expectations
iv. Confirming the accuracy of the total receivable figures in the statement of financial position
v. Confirming contingent liability as to legal fees (5 Marks)

c. State the audit procedures you would take concerning the disposal of plant and machinery. (5 Marks)

d. State the requirements of ISA 505 concerning maintaining control over the external confirmation requests of current assets and liabilities. (5 Marks)

Answer

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Tags: Audit evidence, Current Liabilities, Engineering Assets, External Confirmations, ISA 505 Compliance, Plant and Machinery Disposal
Level: Level 2

Topic: Audit evidence
Series: NOV 2022

AA – Nov 2019 – L2 – Q2a – Audit and Assurance Evidence

Explains examples of external confirmations and identifies relevant and irrelevant audit assertions.

Question

ISA: 505 External Confirmations states that ‘the auditor should determine whether the use of external confirmations is necessary to obtain sufficient appropriate audit evidence at the assertion level’. An Auditor may obtain external confirmations from third parties to corroborate the audit evidence already available with the auditor. The Auditor shall determine whether positive or negative request is appropriate given the condition.

Responses or events of non-responses are required to be evaluated. Responses may be unreliable if they are served indirectly to the auditor, not served by the intended person, or transmission is compromised, and the auditor may have to perform additional procedures to resolve doubts and suspicion. In events of non-responses or management refusal to permit the auditor to seek confirmations, the auditor shall assess if modification in the auditor’s report is necessary.

Required:
Explain FOUR (4) examples of external confirmations and for each one identify:
i) An audit assertion that the external confirmation supports; and
ii) An audit assertion that the external confirmation does NOT support.
(10 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assertions, Audit evidence, External Confirmations, ISA 505, Third Party Confirmations
Level: Level 2

Topic: Audit and Assurance Evidence
Series: NOV 2019

AA – Mar 2024 – L2 – Q3b – Audit and Assurance Evidence

Identify examples of external confirmations and their corresponding audit assertions.

Question

ISA 500: Audit Evidence identifies seven main testing procedures. One of these is external confirmation.

Required:
i) List FOUR (4) examples of external confirmation. (2 marks)
ii) For each of the examples in (i) above, explain: ONE (1) audit assertion that the external confirmation supports, and ONE (1) audit assertion that the external confirmation does not support. (8 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Assertions, Audit evidence, External Confirmations
Level: Level 2

Topic: Audit and Assurance Evidence
Series: MAR 2024

AA – Nov 2022 – L2 – Q4 – Audit Evidence for Engineering Assets and Liabilities

Addressing audit evidence for engineering company assets and liabilities, including procedures for confirmations and plant disposals.

Question

Required:

a. How would you establish the amount and level of audit evidence required for the current assets and liabilities? (5 Marks)

b. State which procedures will be applied to generate audit evidence in the following scenarios:

c. State the audit procedures you would take concerning the disposal of plant and machinery. (5 Marks)

d. State the requirements of ISA 505 concerning maintaining control over the external confirmation requests of current assets and liabilities. (5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit evidence, Current Liabilities, Engineering Assets, External Confirmations, ISA 505 Compliance, Plant and Machinery Disposal
Level: Level 2

Topic: Audit evidence
Series: NOV 2022

AA – Nov 2019 – L2 – Q2a – Audit and Assurance Evidence

Explains examples of external confirmations and identifies relevant and irrelevant audit assertions.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Assertions, Audit evidence, External Confirmations, ISA 505, Third Party Confirmations
Level: Level 2

Topic: Audit and Assurance Evidence
Series: NOV 2019

AA – Mar 2024 – L2 – Q3b – Audit and Assurance Evidence

Identify examples of external confirmations and their corresponding audit assertions.

Question

ISA 500: Audit Evidence identifies seven main testing procedures. One of these is external confirmation.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Audit Assertions, Audit evidence, External Confirmations
Level: Level 2

Topic: Audit and Assurance Evidence
Series: MAR 2024

Question Tag: External Confirmations

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AA – Nov 2022 – L2 – Q4 – Audit Evidence for Engineering Assets and Liabilities

Addressing audit evidence for engineering company assets and liabilities, including procedures for confirmations and plant disposals.

AA – Nov 2019 – L2 – Q2a – Audit and Assurance Evidence

Explains examples of external confirmations and identifies relevant and irrelevant audit assertions.

AA – Mar 2024 – L2 – Q3b – Audit and Assurance Evidence

Identify examples of external confirmations and their corresponding audit assertions.

AA – Nov 2022 – L2 – Q4 – Audit Evidence for Engineering Assets and Liabilities

Addressing audit evidence for engineering company assets and liabilities, including procedures for confirmations and plant disposals.

AA – Nov 2019 – L2 – Q2a – Audit and Assurance Evidence

Explains examples of external confirmations and identifies relevant and irrelevant audit assertions.

AA – Mar 2024 – L2 – Q3b – Audit and Assurance Evidence

Identify examples of external confirmations and their corresponding audit assertions.

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Question Tag: External Confirmations

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AA – Nov 2022 – L2 – Q4 – Audit Evidence for Engineering Assets and Liabilities

Addressing audit evidence for engineering company assets and liabilities, including procedures for confirmations and plant disposals.

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AA – Nov 2019 – L2 – Q2a – Audit and Assurance Evidence

Explains examples of external confirmations and identifies relevant and irrelevant audit assertions.

You're reporting an error for "AA – Nov 2019 – L2 – Q2a – Audit and Assurance Evidence"

AA – Mar 2024 – L2 – Q3b – Audit and Assurance Evidence

Identify examples of external confirmations and their corresponding audit assertions.

You're reporting an error for "AA – Mar 2024 – L2 – Q3b – Audit and Assurance Evidence"

AA – Nov 2022 – L2 – Q4 – Audit Evidence for Engineering Assets and Liabilities

Addressing audit evidence for engineering company assets and liabilities, including procedures for confirmations and plant disposals.

You're reporting an error for "AA – Nov 2022 – L2 – Q4 – Audit Evidence for Engineering Assets and Liabilities"

AA – Nov 2019 – L2 – Q2a – Audit and Assurance Evidence

Explains examples of external confirmations and identifies relevant and irrelevant audit assertions.

You're reporting an error for "AA – Nov 2019 – L2 – Q2a – Audit and Assurance Evidence"

AA – Mar 2024 – L2 – Q3b – Audit and Assurance Evidence

Identify examples of external confirmations and their corresponding audit assertions.

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