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Audit procedures for verification of Assets, liabilities and equity
Ans:
Audit procedures for verification of assets, liabilities, and equity items are essential to ensure that these items are properly stated in the financial statements. In the case of teeming and lading fraud, verification procedures can help auditors to detect misstatements in assets, liabilities, and equity items resulting from fictitious transactions.
Assets:Includes-
Accounts Receivable:
Auditors can select a sample of accounts receivable balances and perform confirmations with customers to verify the existence and accuracy of the balances.
Inventory:
Auditors can perform a physical inventory count and compare the results to the inventory records in the company's accounting system. Any discrepancies can be investigated to determine the cause of the difference.
Property, Plant, and Equipment (PPE):
Auditors can perform a physical inspection of the PPE and compare the results to the PPE records in the company's accounting system. Any discrepancies can be investigated to determine the cause of the difference.
Liabilities:Includes-
Accounts Payable:
Auditors can select a sample of accounts payable balances and perform confirmations with suppliers to verify the existence and accuracy of the balances.
Accrued Expenses:
Auditors can review the company's documentation and agreements to verify the accuracy of accrued expenses.
Equity:Includes-
Share Capital:
Auditors can review the company's documentation and agreements to verify the accuracy of share capital.
Retained Earnings:
Auditors can review the company's documentation and agreements to verify the accuracy of retained earnings. In the case of teeming and lading fraud, auditors must exercise professional skepticism and perform due diligence to detect any fraudulent activity in the financial statements. Auditors must also ensure that they have obtained sufficient and appropriate audit evidence to support their conclusions regarding the accuracy of assets, liabilities, and equity items.