w7 auditing question

5) You are performing an audit of purchases of desktop computers. Describe the audit procedure(s) you might use to achieve each of the five audit objectives listed below. Be specific. Use slide 3 in the week 5 lecture for the list of possible audit procedures (you may want to also consult PCAOB 15 paragraphs 15-21 as well as other readings in week 5). You will not get credit for a one word answer.

slide 3 in the week 5 lecture

1) PCAOB 15 Audit Evidence

http://pcaobus.org/Standards/Auditing/Pages/Auditing_Standard_15.aspx

1) All of the computers purchased have been recorded in the accounting records.

2) The computers recorded as being purchased actually exist.

3) Depreciation expense has been calculated correctly

4) Laws and regulations regarding software usage have been followed (e.g., no pirated or illegal software is installed).

5) The computers are properly safeguarded from theft or unauthorized use.

Here is a helpful hint on how to go about responding to question 5.

For example let’s say you are asked to determine that the useful lives and salvage values of the computers are reasonable. A possible response would be to inquire about how the useful lives and salvage values of the computers were determined and then compare the estimated useful lives and salvage values of these computers with comparable computers used in other divisions or functional areas of the company.

Extra Credit – True/False (each question is worth 1 point)

1) Most frauds are detected by internal auditors.

2) Evidence from within the company is considered more reliable than evidence obtained from third parties

3) The internal auditor has no role in fraud prevention or detection

4) Confirmation involves examining trends and relationship among financial and non-financial data

5) Expertise within the internal auditing department is a barrier to implementing data analysis technologies