Following Are Examples of Evidence That Could Be Collected During

question 78

Essay

Following are examples of evidence that could be collected during an audit of financial statements.
1.Duplicate copies of sales invoices
2.Inspection of new $100 000 cutting machine
3.Bank confirmation
4.Remittance advices
5.Vendors' invoices
6.Standard letter from lawyer to auditor
7.Auditor inventory count sheets
8.Shipping documents
9.Payroll cheques
10.Long-term debt agreements review notes
11.Auditor interest expense calculation worksheet
12.Observation by auditor of computer error message (invalid supplier number)
13.Gross margin calculation
14.Interview notes from interview with credit manager
Required:
Classify each type of evidence as to its reliability (1 - high,2 - moderate,3 - low).Justify your classification.

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Definitions:

Annuity

An annuity is a financial product that pays out a fixed stream of payments to an individual, typically used as part of a retirement strategy.

Compounded Monthly

Interest calculation method where interest is added to the principal balance monthly, allowing the interest to earn interest each month.

Ordinary Perpetuity

A perpetuity in which the payments are at the end of each payment interval.

Ordinary Annuity

A sequence of equal payments made at equal intervals of time, with the first payment occurring at the end of the period.