Auditing Cases: an Interactive Learning Approach Case 2.2

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Audit Evidence

Identify deficiencies in the sufficiency and appropriateness of the evidence gathered in the audit of accounts payable of Grande Stores.


1. An insufficient number of confirmations were sent for McClure Advertising Credits (four). Typically alternative procedures may be acceptable but a telephone confirmation should never be. It appears that the differences found were immaterial, but the auditors should have determined the reason for the differences. If any errors were discovered then they should have been projected to the population. The additional twenty credits selected for testing may have been sufficient, but that is purely a matter of judgment that could be affected by several factors. The act of placing the ads is far from adequate evidence without quality supporting evidence from the vendors. By using such a small sample, it is critical that the items selected for adequately represent the entire population of the list (Beasley, Buckless, Glover, & Prawitt, 2012).

2. The Springbrook Credits were not supported by a written confirmation and the auditor was suspicious of the client’s changing explanation about the nature of the credits and their unwillingness to allow written confirmation of the amounts. It appears that no additional testing to resolve any doubts about the validity of the credits was performed by the auditor (Beasley, Buckless, Glover, & Prawitt, 2012).

3. In the case of the Ridolfi Credits, the auditor obtained an oral confirmation that these credits were not invalid from the vendor. The client claimed that the auditor's information was incorrect, but would not allow the auditor to obtain written confirmation from Ridolfi. The credit memos had been altered, which indicated to the auditor that the credits were not valid. The auditor was advised not to contact Ridolfi due to pending litigation between Grande and Ridolfi (Beasley, Buckless, Glover, & Prawitt, 2012).

4. By sending only...