Why is this question wrong…

  • Creator
    Topic
  • #190206

    Which of the following best describes the reason an auditor performs a walkthrough of transactions from inception through financial statement presentation?

    1. To ensure that the single transaction type involved in a walkthrough is properly recorded in the general ledger

    2. To determine if a necessary control is missing or ineffective

    3. To determine the different types of significant transactions handled by the process

    Answer is 2 & 3. In my experience, 1. is correct as well… while you test walkthroughs you ensure that the example transaction is carried from document to GL. Why isn’t #1 included? Just looking for some additional opinions on the matter.

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Viewing 7 replies - 1 through 7 (of 7 total)
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  • #619384
    Anonymous
    Inactive

    Walkthroughs are used as tests of controls and not substantive tests. #1 seems to be more focused on the transaction cycle.

    #619385
    MommyBear
    Member

    Walkthroughs are done to understand the process and test controls. They don't look at the general ledger very much during walkthroughs. Cuttoff testing, tracing, etc test how/when things are booked to the general ledger.

    #619386
    Anonymous
    Inactive

    Walkthroughs are all encompassing and include:

    Inquiry

    Observation

    Inspection

    #619387
    MommyBear
    Member

    So then #1 should be included and the answer in his test bank is wrong?

    #619388

    I realize that walkthroughs aren't substantive tests. But, if I'm going through the entire process to see how a revenue is received, wouldn't I double check the GL to make sure that specific amount is included in the day's deposits?

    AUD // F x2 P 92- (Test server crashed! It really does happen!)
    REG // F, F, F, P - 75 Aug 2014
    BEC // P - 80
    FAR // F, F...now its time for my greatest trick yet.
    Ethics // Very.

    75 to stay alive

    #619389

    I would say #1 is incorrect because walkthroughs are meant to gain an understanding of controls, not as substantive test of transactions.

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    #619390
    mw798
    Member

    @elprezidente07 because you would TRACE a transaction through to the G/L, not perform a walkthrough. Hopefully this clarifies it for you.

Viewing 7 replies - 1 through 7 (of 7 total)
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