Question

State few appropriate circumstances in which the surprise checking as a tool for examination of audit evidences would be relevant.

Answer 1

Answer:

1. Cash Verification

2. Fixed Asset Verification

Explanation:

Answer 2

The circumstance when a surprise check acts as a tool is when the auditor is not satisfied with the internal control of a company.

• Surprise checks are primarily intended to determine whether the internal control system is functioning effectively.
• It also ascertains whether the accounting and other records are being prepared simultaneously and kept up to date.
• Surprise checks are carried out to ascertain the feasibility of items, like cash, stocks, assets, or statutory registers which are normally required for audit purposes, etc.
• They also play a major role in ensuring that the prime entry books, such as cash books, sales books and purchase journals etc., have been kept up-to-date.
• When an EDP system  is used, surprise inspections, using test-checks etc. are important to ensure satisfactory functioning of the programs