Abstract This article presents question and answer asked in the auditing section of the Uniform Certified Public Accountant examination on November 3, 1960. One question stated that Star Wholesale Co. is a wholesaler selling merchandise to local hardware and paint stores. The Coaton Paint Co. has sold its outdoor paint products to Star Wholesale Co. for years on regular terms. The candidates have to make adjustment of balance sheet account and recommend proper audit procedures. The answer to this question is, the auditor discovered the unsatisfactory control over consigned goods before the balance sheet date, he can and should request the client to segregate the consigned stock before taking the annual physical inventory. Verification of the consigned goods on hand by physical count is an essential step in determining the amount advanced to the consignor and the proper amounts for inventory and accounts payable. Another question is, in most medium-sized and large audits, it is customary for the auditor to select for detailed examination a series of items entered in the voucher register. The selection is from a period other than at year end. Answer to this question is, in medium-sized and large audits, primary emphasis is placed upon evaluation of internal controls rather than verification of any substantial portion of individual items in the accounts.

Abstract The article presents information on examinations in auditing with special reference to one of the problems that was included in the question paper. The auditing section of the May 1961 Uniform C.P.A. Examination was given on May 18, 1961. It is assumed that the amounts involved at the western outlet are material if these items were not material there would be no necessity for any audit work. The principal auditor should be willing to accept full responsibility for the work of another auditor under the following conditions: the other auditor is selected by the principal auditor after appropriate inquiry and investigation. The other auditor is a correspondent firm previously used with satisfactory results by the principle auditor. If the client acted on his own initiative to retain the other auditor, the principle auditor may not wish to accept responsibility for that phase of the work and should disclose in the audit report the use of other independent accountants for examination of the western outlet.