Audit Fieldwork & Testing

A December 31, 2025 bank reconciliation begins with a bank statement ending balance of C$72,440, but the bank confirmation shows the actual December 31 balance was C$67,440. The C$5,000 difference relates to a January 2 deposit that the client recorded on December 31. What is the primary problem with the reconciliation as prepared?

External counsel states that an unfavorable outcome is likely and estimates exposure at C$120,000 to C$150,000. Management's legal memo supports a C$135,000 exposure estimate but reduces the net exposure to C$95,000 by assuming a C$40,000 insurance recovery. The file contains no insurer acceptance, coverage confirmation, or other support for that recovery. What blocks a supportable audit conclusion on management's net-exposure analysis?

The fixed asset register for Blue Haven Marina Ltd. shows a forklift disposal dated December 30, 2025. The signed sale agreement is dated January 5, 2026, and the bank deposit was received on January 6, 2026. What should the reviewer require before finalizing disposal testing?

Marianne Côté performs a floor-to-sheet test during the December 31, 2025 count at Cedar Vale Hardware Ltd. She counts 36 cartons of SKU T-440 in Bin C14, but the client’s count sheet for Bin C14 is blank because the aisle was skipped and never revisited. What follow-up is required before the auditor can conclude the recorded count is complete?

For a December 31, 2025 year end, the client provided the auditor with only the first five business days of January 2026 disbursements to support the search for unrecorded liabilities. The business has irregular payment cycles, and several large suppliers are usually paid near the end of each month. What issue must be resolved before this procedure can support the omitted-liability conclusion?