EXERCISES

8-11

Open the Accounts Receivable file (“Ar”). Perform the appropriate tests to answer the following
questions:

a. How many customers are there?

There are 722 customers in the Accounts Receivable file.
b. How many customers have negative balances, and what do these negative balances total? What
do the negative balances mean?
There are 161 customers with the total of $-58, 396.86. The negative balances implies that
there's an advance payment happened.
c. How many customers have individual receivables for more than $1000?
There are 190 customers that has an individual receivables for more than 1000.
d. What is the average amount of accounts receivable?
The average amount of the accounts receivable is $607.36
e. Stratify the receivables into ten strata. Click on Graphable Data to see the graph. Which strata
has the highest number of receivables?
The Graphable Data showed that the Amount ≥ 68.89 and the Amount ≤ 983.10 has the
highest number of receivables.
f. Perform Benford analysis on the accounts receivable amounts. What are some possible
explanations for these results? How would you as an auditor proceed?

g. Open the Accounts Payable transaction file (Ap_trans). Perform the appropriate tests to answer
the following questions:
h. How many transactions are there in this file?
i. How many vendors are represented in this file?
j. Determine if there are any gaps in invoice numbers. Would this be concern to you as an auditor?
What would you do to reconcile the differences?
k. Are there any duplicate invoice numbers? How would you resolve the discrepancy?
l. Which vendors purchase inventory items of more than $100 each?
m. Age the accounts payable file as of December 31, 2000. Click on Graphable Data to see a visual
of the results. If you were auditing this company and got these results, would you be
concerned? Explain.
n. Do any vendors have post office boxes as their street address?
o. Perform Benford analysis on the accounts payable invoice amounts. Is there any evidence of
fraud in payables? How would you as an auditor proceed?

8-12

Open the Inventory file. Perform the appropriate tests to answer the following questions:

a. How many different inventory items are maintained by this company?

 b. How many inventory items are sold at Location 3?
c. What is the average cost of an inventory item? What is the most expensive and least expensive
inventory item?
d. What is the profit on inventory item #034255003?
e. How many products have status of “U”?
f. Are there any products for which the sales price is less than the unit cost? Would you be
concerned about this as an auditor?
g. Are there any products on hand for which the quality on hand is less than the reorder point, but
which do not have any quantity on order? Is this a problem? Why or why not?
h. What is the total market value of the inventory?

8-13

Open the employee master file (Empmast). Perform the appropriate tests to answer the
following questions:

a. How many total employees are there?

b. How many male and many female employees are there?
c. How many employees have a college degree? Assume an education level of sixteen years is
equivalent to a college degree.
d. What is the average employee annual salary? What are the highest and lowest salary amounts?
e. Do any employees appear to be grossly over- or underpaid? How would you investigate this?
f. Have any employees received unusually large bonuses or commissions?
g. Are there any employees with the same address? Would this be of concern to you as an
auditor?
h. Do any employees appear to be related? Do any work in the same department? Explain how you
tested this.

8-14

Open the Payroll file. Perform the following tests:

a. Are there any duplicate check numbers?

b. Are there any gaps in payroll check numbers?
c. Does gross pay less taxes equal net pay in all cases?