Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: 1) inspection, 2) external confirmation, 3) recalculation, 4) observation, 5) inquiry of the client, 6) reperformance, and 7) analytical procedure.
\[\begin{array} { | l | l | }
\hline \begin{array} { l }
\text { Type of } \
\text { Evidence }
\end{array} & \text { Audit Procedures } \
\hline & \text { 1. Watch client employees count inventory to determine whether } \
& \text { company procedures are being followed. } \
\hline & \text { 2. Count inventory items and record the amount in the audit } \
& \text { working papers. } \
\hline & \begin{array} { l }
\text { 3. Stand by the payroll time clock to determine whether any } \
\text { employee "punches in" more than one time. }
\end{array} \
\hline & \begin{array} { l }
\text { 4. Calculate the ratio of cost of goods sold to sales as a test of } \
\text { overall reasonableness of gross margin relative to the preceding } \
\text { year. }
\end{array} \
\hline & \begin{array} { l }
\text { 5. Obtain information about the client's internal controls by asking } \
\text { questions of client personnel. }
\end{array} \
\hline & \begin{array} { l }
\text { 6. Trace totals from the cash disbursements journal to the general } \
\text { ledger. }
\end{array} \
\hline & \begin{array} { l }
\text { 7. Examine a piece of equipment to make sure a recent purchase } \
\text { of equipment was actually received and is in operation. }
\end{array} \
\hline & \begin{array} { l }
\text { 8. Review the total of repairs and maintenance for each month to } \
\text { determine whether any month's total was unusually large. }
\end{array} \
\hline & \text { 9. The auditor computes the debt covenant based on the financial } \
\text { information to ensure that the client's calculation was performed } \
\text { correctly. } & \text { 10. Re-foot entries in the sales journal to determine whether they } \
& \text { were correctly totalled by the client. } \
\hline & \begin{array} { l }
11 . \text { Make a surprise count of petty cash to verify that the amount } \
\text { of the petty cash fund is intact. }
\end{array} \
\hline \begin{array} { l }
12 . \text { Obtain a written statement from the client's bank stating the } \
\text { client'syear-end balance on deposit. }
\end{array} \
\hline
\end{array}\]

Question

Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: 1) inspection, 2) external confirmation, 3) recalculation, 4) observation, 5) inquiry of the client, 6) reperformance, and 7) analytical procedure.
 \[\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Type of } \
\text { Evidence }
\end{array} & \text { Audit Procedures } \
\hline & \text { 1. Watch client employees count inventory to determine whether } \
& \text { company procedures are being followed. } \
\hline & \text { 2. Count inventory items and record the amount in the audit } \
& \text { working papers. } \
\hline & \begin{array} { l } 
\text { 3. Stand by the payroll time clock to determine whether any } \
\text { employee "punches in" more than one time. }
\end{array} \
\hline & \begin{array} { l } 
\text { 4. Calculate the ratio of cost of goods sold to sales as a test of } \
\text { overall reasonableness of gross margin relative to the preceding } \
\text { year. }
\end{array} \
\hline & \begin{array} { l } 
\text { 5. Obtain information about the client's internal controls by asking } \
\text { questions of client personnel. }
\end{array} \
\hline & \begin{array} { l } 
\text { 6. Trace totals from the cash disbursements journal to the general } \
\text { ledger. }
\end{array} \
\hline & \begin{array} { l } 
\text { 7. Examine a piece of equipment to make sure a recent purchase } \
\text { of equipment was actually received and is in operation. }
\end{array} \
\hline & \begin{array} { l } 
\text { 8. Review the total of repairs and maintenance for each month to } \
\text { determine whether any month's total was unusually large. }
\end{array} \
\hline & \text { 9. The auditor computes the debt covenant based on the financial } \
\text { information to ensure that the client's calculation was performed } \
\text { correctly. } & \text { 10. Re-foot entries in the sales journal to determine whether they } \
& \text { were correctly totalled by the client. } \
\hline & \begin{array} { l } 
11 . \text { Make a surprise count of petty cash to verify that the amount } \
\text { of the petty cash fund is intact. }
\end{array} \
\hline \begin{array} { l } 
12 . \text { Obtain a written statement from the client's bank stating the } \
\text { client'syear-end balance on deposit. }
\end{array} \
\hline
\end{array}\]

Quizplus · Accepted Answer

The Answer of Below are 12 audit procedures. Classify each procedure according to the following types of audit evidence: 1) inspection, 2) external confirmation, 3) recalculation, 4) observation, 5) inquiry of the client, 6) reperformance, and 7) analytical procedure.
 \[\begin{array} { | l | l | } 
\hline \begin{array} { l } 
\text { Type of } \
\text { Evidence }
\end{array} & \text { Audit Procedures } \
\hline & \text { 1. Watch client employees count inventory to determine whether } \
& \text { company procedures are being followed. } \
\hline & \text { 2. Count inventory items and record the amount in the audit } \
& \text { working papers. } \
\hline & \begin{array} { l } 
\text { 3. Stand by the payroll time clock to determine whether any } \
\text { employee "punches in" more than one time. }
\end{array} \
\hline & \begin{array} { l } 
\text { 4. Calculate the ratio of cost of goods sold to sales as a test of } \
\text { overall reasonableness of gross margin relative to the preceding } \
\text { year. }
\end{array} \
\hline & \begin{array} { l } 
\text { 5. Obtain information about the client's internal controls by asking } \
\text { questions of client personnel. }
\end{array} \
\hline & \begin{array} { l } 
\text { 6. Trace totals from the cash disbursements journal to the general } \
\text { ledger. }
\end{array} \
\hline & \begin{array} { l } 
\text { 7. Examine a piece of equipment to make sure a recent purchase } \
\text { of equipment was actually received and is in operation. }
\end{array} \
\hline & \begin{array} { l } 
\text { 8. Review the total of repairs and maintenance for each month to } \
\text { determine whether any month's total was unusually large. }
\end{array} \
\hline & \text { 9. The auditor computes the debt covenant based on the financial } \
\text { information to ensure that the client's calculation was performed } \
\text { correctly. } & \text { 10. Re-foot entries in the sales journal to determine whether they } \
& \text { were correctly totalled by the client. } \
\hline & \begin{array} { l } 
11 . \text { Make a surprise count of petty cash to verify that the amount } \
\text { of the petty cash fund is intact. }
\end{array} \
\hline \begin{array} { l } 
12 . \text { Obtain a written statement from the client's bank stating the } \
\text { client'syear-end balance on deposit. }
\end{array} \
\hline
\end{array}\]

Below Are 12 Audit Procedures