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- May 17, 2018 at 7:44 pm #452581
You are audit senior of Viola and co and are currently conducting audit of Poppy co for the year ended 30 June 20×6
Materiality has been set at $50000 and you are carrying out detailed substantive testing on year end payable balance
The audit manager has emphasised the understatement of trade payables balance is a significant audit riskBelow is extract from list of supplier statement as at 30 june 20X6 held by company and corresponding payables ledger
balances at the same date along with some commentary on the noted differencesSupplier Statement balance payable ledger balance
Carnation co
Lily coCarnation co
The difference in the balance is due to an invoice which is under dispute dur to faulty goods which were returned
on 29 june 20X6Lily co
The difference in the balance is due to supplier statement showing an invoice dated 28 june 20×6 for$70000
which was not recorded in financial statement until after year end. The payable clerk has advised the audit team
that the invoice was not recieved until 2 july 20×6Audit manager has asked you to review full list of trade payables and select balances on which supplier statement
reconcilations will be performedWhich of the following items should you select for testing?
a)suppliers with material balances at year end
b)suppliers which havea high volume of business with Popy co
c)major suppliers with nil balances at year end
d)major suppliers where staement agrees to the ledgerSir correct ans is a, b and c but please can you explain
May 18, 2018 at 8:04 pm #452747I can’t be bothered reading this. Surely your revision kit explains the answer.
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