Question

Distinguish between substantive test of transaction and test of details of balance. Also provide an example of each for acquition and payment cycle.

Answer 1

Trial of controls and substantive methodology are all piece of review strategies.

Trial of controls is a review test to test the viability of the customer's inward control framework.

substantive systems is a review test to test the sensibility of things in the money related articulations.

On the off chance that the inward control is viable, at that point the inspector will utilize more trial of controls and less substantive tests.

In the event that the inside controls are less compelling, at that point the examiner will utilize more on substantive tests.

What's more, this will take more review time.

There are 7 review strategies incorporates perception, request, investigation, re execution , recalculation, affirmation, systematic strategy.

The initial four are has a place with trial of control, the last three are a piece of substantive strategies. So logical technique is likewise test the sensibility of things in FS. It is utilization of proportions and pattern examination with the end goal to empower the evaluator to build up specific exemptions as how the figures in monetary articulation will resemble.

Test of controls

*Auditor identifies the key internal controls and weaknesses and assesses control risk.

*Auditor performs test of control to obtain evidence that controls are oprting efficiently.

Substantive test of transaction

* Recoreded acquitions are for goods and services received (occurence).

*Existing acquition are recorded (Completeness)

*Acquitions are accurately recorded (accuracy)

*Acquitions are correctly included in master files (posting and summarization)

*Acquitions are correctly classified (classification)

*Acquitions are recorded on correct dates (timing)