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2. Below is a list of procedures (a-g).

a) Confirm accounts payable with vendors, especially regular suppliers showing small or zero balances in the yearend accounts payable. Be sure to verify the vendors addresses so thatconfirmations will not be misdirected, perhaps to conspirators in a scheme to understate liabilities.

b) Read the board of directors minutes to identify material lawsuits and determine whether anyadjustments for a contingent loss liability is needed.

c) Calculate an expectation for amounts owed to foreign governments based on known tax rates in different jurisdictions that the company operates as well reported income and investigate if the amount is significantly different from reported amounts.

d) When auditing the details of sales revenue, pay attention to the terms of sales to determine whether any amounts have been earned.

e) Perform analytical procedures appropriate in the circumstances. Compare important expense account balances to those of prior years to notice any that this year appear to be too low.

f) Select a sample of cash disbursements from the accounting period following the balance-sheet date. Vouch them to supporting documents (invoice, receiving report) to determine whether the related liabilities were recorded in the proper accounting period.

g) Observe to ensure that payroll checks are distributed by a person not involved in processing or recording payroll.

Required:

For each procedure (a-g) above identify:

1. The relevant transaction cycle

   A. Acquisition and Expenditure Cycle; B. Human Resources and Payroll Cycle

2. The primary management assertion addressed

   1. Existence or Occurrence; 2. Rights and Obligations; 3. Completeness; 4. Valuation;

   5. Presentation and Disclosure

3. The specific account(s) being tested

   a. Accounts Payable; b. Accrued Liabilities; c. Income Taxes Expense/Payable; d. Payroll Expense/Liability; e. Unearned Revenue

Example Answer: a) B, 5, c

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