Auditing and Assurance Services 1st Edition by Iris Stuart

Exercise 27

Substantive tests of transactions. Two auditors are discussing the audit procedures for sales revenue. Stacy Mendoza believes that the best way to test sales revenue is to select a random sample of recorded sales and to trace these sales back through the system to the supporting documents, noting that all items billed were shipped and that the sales were invoiced at the correct prices. Takai Wong disagrees. He believes that it is better to gather evidence for the sales process by starting with the prenumbered shipping documents and then tracing them forward through the system to the invoice, noting the existence of control procedures and the correctness of the invoice processing.
a. If you follow Stacy's audit approach, identify the assertion supported by your evidence.
b. If you follow Takai's audit approach, identify the assertion supported by your evidence.
c. Which auditor is correct