Question

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

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

Audit procedure:

Vouch entries in sales journal to sales invoices and related shipping documents.

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

Answer 1

The audit procedure of vouching entries in the sales journal to sales invoices and related shipping documents uses Inspection of Documents as its audit evidence to satisfy the transaction-related audit objectives of Existence and Accuracy.

Step-by-step explanation:

When performing an audit, auditors rely on various types of audit evidence to assure that the financial statements they are assessing accurately reflect the company's financial position. For the specific audit procedure of vouching entries in the sales journal to sales invoices and related shipping documents, the type of audit evidence used would be Inspection of Documents. This process involves examining records or documents, whether internal or external, in paper or electronic form. An auditor physically examines the documents to corroborate the sales transactions recorded in the sales journal.

By doing this, the auditor aims to satisfy certain transaction-related audit objectives. The primary objectives here are Existence, confirming that the sales did occur, and Accuracy, verifying that the sales were recorded for the correct amount. Therefore, this audit procedure ensures that the sales recorded are both real and accurately captured within the financial records.