Question

Identify the type of audit evidence used for each audit procedure.

Identify the general balance-related audit objective or objectives satisfied by each audit procedure.

Audit procedure:

Compare the quantities on hand and unit prices on the year's inventory count sheets with those in the preceding year as a test for large differences.

a) Type of Audit Evidence: Reperformance; Balance-Related Audit Objectives: Valuation.
b) Type of Audit Evidence: Confirmation; Balance-Related Audit Objectives: Existence and Completeness.
c) Type of Audit Evidence: Analytical Procedures; Balance-Related Audit Objectives: Valuation.
d) Type of Audit Evidence: Inspection of Documents; Balance-Related Audit Objectives: Accuracy.

Answer 1

The audit procedure comparing current to prior year inventory count sheets uses 'inspection of documents' as evidence to satisfy the 'accuracy' audit objective, verifying inventory figures.

Step-by-step explanation:

The comparison of quantities on hand and unit prices on the year's inventory count sheets with those in the preceding year serves as a test for large differences. The type of audit evidence used for this audit procedure is inspection of documents, where the auditor reviews physical or electronic records to substantiate the information. This process helps to satisfy the balance-related audit objective of accuracy, ensuring that the inventory figures accurately reflect the actual counts and prices and are free from material misstatements.