Reference no: EM132597714

You are the auditor in-charge for Madu's financial statements for the year ended 31 October 2019. Below are the matters for your review:

i. Billing and Account Receivables

In the billing department, one copy of the bill of lading is attached to the customer's copy of the invoice and both are mailed to the customer. The other copy of bill of lading, together with the sales order form, is then attached to the invoice file copy and filed in invoice numerical order. As the computer generates invoices, it also stores the transactions in an electronic file that is used to update the accounting records daily. A summary report is generated and all journals and ledgers are printed for a hardcopy of the records.

ii. Account Payables

The account payable clerk prepares a monthly check to Nudy Sdn. Bhd. for the amount of an invoice owed and submits the unsigned cheque to the treasurer for payment along with related supporting documents that have already been approved. When she receives the signed cheque from the treasurer, she records it as a debit to accounts payable and deposits the cheque in a personal bank account for a company named Nudy Sdn. Bhd. A few days later, she records the invoice in the acquisitions journal again, resubmits the documents and a new cheque to the treasurer, and sends the cheque to the vendor after it has been signed.

iii. Property, Plant and Equipment

All equipment is depreciated on the straight-line basis (no salvage value taken into consideration) based on the following estimated lives: buildings, 25 years; all other items, 10 years. The corporation's policy is to take one-half year's depreciation on all assets acquisitions and disposals during the year.

Required:

Question 1: Recommend FOUR (4) substantive procedures to be performed to obtain sufficient and appropriate audit evidence for each of the matters above.