Question

Discuss the following related to property management process:

Inherent risk assessment

Control risk assessment

Analytical procedures

Answer:

Explain disclosure assertions issues related to investments Audit? (2.5 Marks)

Answer:

For each of the following substantive procedures, first note whether it is a test of details of transactions or a test of details of account balances. Then decide for which assertion the test provides the best evidence. (2.5 Marks)

Trace large cash receipts and payments to the source documents and the general ledger.

Examine copies of note and bond agreements.

Recompute accrued interest payable.

Review debt activity for a few days before and after year-end to determine whether transactions are included in the proper period.

Examine due dates on notes and bonds for proper classification between current and long term debt.

Answer

Answer 1

Ans-Inherent risk assessment and Analtyical procedure process is used by auditors while auditing.Control risk assessment is a technique used by managment to assess the effectiveness of their internal control.

With the helpof control risk assessment managment check whether applied internal control properly detect and correct misstatements during the normal course of business

Ans -b) Financial statements include assertions related to the recognition , measurement , presentation, and disclosure of the financial information contained with in such statements.The role of the auditor in a financial statement audit is toobtain sufficient and appropriate audit evidence as to managment assertion can be supported.Assertion related to investment is as follows-

i)Existence-whether investment exists on a balance sheetdate

ii)Completeness- All disclosure related to investment have been included or not in the financial statement

iii)Classification-Whether investment is properly classified in short term or long term

iv)valuation - Balance of the investment that are included in the financial statement are properly valued.

Ans- Substantive procuedures is a process or test that creats conclusive audit evidence regarding the completeness,existence,disclosure of the account balance not a transaction.