Читать книгу Wiley Practitioner's Guide to GAAS 2020 - Joanne M. Flood - Страница 232

During a visit to the client’s administrative office, the auditor should do the following:

1 Meet with in-house legal counsel and inquire about:LitigationCompliance with laws and regulationsKnowledge of fraud or suspected fraudWarrantiesPostsales obligationsArrangements, such as joint ventures, with business partnersThe meaning of contract terms

2 Meet with financial and administrative officers and obtain or determine the following:The functions of each executiveThe executive responsible for the auditThe existence of an internal audit functionOrganization chartsLocations and relative importance of all offices, showrooms, warehouses, and factoriesCorporate manuals or memoranda that provide information about the following:Nature and description of the entity’s productsProduction and distribution methodsInternal controlGeneral ledger chart of accountsMethods of financing the entity’s operationsSchedule of long-term debtNames of banks and account executive at each bank; for each bank, determine the following:Outstanding indebtedness and terms of paymentLines of creditOther banking servicesFor nonpublic companies, a schedule of stockholders with the following information:NamesAddressesCertificate numbersNumber of shares heldShareholder function in the businessPurchase terms:Terms of paymentAre letters of credit used for foreign purchases?Sales terms:Terms of paymentAre letters of credit used for foreign sales?Changes in the entity’s marketing strategies, sales trends, or contractual arrangements with its customersThe existence of related-party transactions such as the following:Purchases and salesLoansReceiving or providing services, such as management, legal, and administrativeInformation systems:System changesSystemic control failuresOther information systems-related risksSchedule of all affiliates and nonconsolidated subsidiariesCustomers and suppliers on whom the entity is economically dependentMost recent trial balanceGeneral ledger and books of original entry:Are accounting records up to date?What is the quality of accounting records?Extent of client responsibility, including the involvement of the internal audit function, for preparation of the following:Trial balanceSchedulesAdjustments and accrualsConfirmationsInventory instructionsFinancial statementsIncome tax returnsTentative audit schedule; agree to dates for the following:Physical inventoryCash and securities countMailing and confirmationsStart of fieldwork

3 Obtain the entity’s forms and documents, such as the following:Purchase requisitionsPurchase ordersSales authorizationsSales ordersSales invoicesProduction ordersProduction requisitionsReceiptsChecksPayroll cardsSales returns and creditsPurchase returns and credits

4 Examine work area that will be allocated to the auditor.

5 Walk through the accounting area:Observe work conditions.Meet employees.Determine employee functions.