Auditing Problem No. 1: Rodrigo Duterte

Ngayong Lunes ay ipapakita na daw ni Duterte ang laman ng kanyang pera sa bangko. Ito ay sa kabila ng hindi pagsunod ni Trillanes sa rule of law sa pamamagitan ng hindi paghahain ng affidavit, na naunang hiniling ni Duterte.

Maaring may ideya ka na kung paano mo masosolve ang problemang ito kahit paano. Use all the things that you learned in Auditing Problems or in Practical Accounting 1.


Rodrigo Duterte showed you his Statement of Assets, Liabilities, and Net Worth. The part of Assets section comprised the following.

SalnRD2

You, as the leader of the audit team, are tasked to audit the balance of his cash and cash equivalents.

While examining Duterte’s bank accounts, you confirmed from Trillanes, a third party, that Duterte had the following accounts at BPI – Julia Vargas amounting to 211 million pesos, with the balances as follows:

sara-digong-bank-transactions-0427

Your audit team members had been very diligent in searching for unrecorded cash and cash equivalents of the Davao City mayor:

  • Ellen, knowing the account number due to eavesdropping with your discussions with the client, had deposited 500 pesos into your client’s account.She showed to you the deposit slip:

13118848_10154141210519282_2834891783368772366_n

  • After knowing that Mayor Duterte had a dollar account, Mar deposited US$10 to confirm the existence of that account.

Trillanes had further stated that Duterte had 2.407 billion pesos in banks. The transaction is as follows:

duterte-accounts-620x2349

You then obtained a bank confirmation from the BPI:

awwawaawaw

Assume that Duterte’s existing account at BPI and another dollar account had not yet been included in the said SALN.


Requirements:

  1. What is the cash balance Rodrigo Duterte should report in his SALN?
  2. Prepare adjusting entries.

Discussion Questions:

  1. Confirmation of balances from third parties is essential in an audit. Would the confirmation from Trillanes, being a third party, of Rodrigo Duterte’s cash balance be considered a sufficient and appropriate evidence? Explain.
  2. Same question. Will your answer be different if Trillanes had obtained a bank document signed by the bank manager and other responsible officers? Explain.
  3. If substantive tests are to be employed here, how will you document it in the working papers?
  4. In auditing Duterte’s cash and cash equivalents, what are the audit objective/s to be established? (You may choose more than one.)
  • Existence
  • Completeness
  • Rights and obligations
  • Valuation and allocation
  • Presentation and disclosure
  1. Would you consider Ellen and Mar’s act of depositing at Duterte’s account an appropriate audit procedure? Explain.

Auditing Problem prepared by: TweetNewscaster

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