Question 1
When an auditor recomputes the unexpired portion of prepaid insurance, they are satisfying which audit objective?
◦ completeness
◦ existence
◦ accuracy and detail tie-in
◦ rights
Question 2
When auditing prepaid insurance,
◦ for many audits, significant substantive procedures are needed if the control risk is low.
◦ companies often have a standard monthly journal entry to reclassify prepaid insurance as insurance expense.
◦ the emphasis in the tests of details of balances is on insurance expense.
◦ the auditor must prepare the insurance register.