Question

Identify some of subtentive test and analatical procedures need to carry out on the completion of Audit work. [10 Marks

Answer 1

Answer:

Some of Substantive Procedures:

1. Bank confirmation

2. Accounts receivable confirmation

3. Inquire of management regarding the collectibility of customer accounts

4. Match customer orders to invoices billed

5. Match collected funds to invoices billed

6. Observe a physical inventory count

7. Confirm inventories not on-site

8. Match purchasing records to inventory on hand or sold

9. Confirm the calculations on an inventory valuation report

10. Observe fixed assets

11. Match purchase orders and supplier invoices to fixed asset records

12. Confirm accounts payable

13. Examine accounts payable supporting documents

14. Confirm debt

15. Analytical analysis of assets, liabilities, revenue, and expenses

Some of Analytical Procedures:

1. Comparison of the entity’s financial information with comparable information for prior periods.
2. Comparison of the entity’s financial information with anticipated results of the entity, such as budgets or forecasts, or expectations of the auditor, such as an estimation of depreciation.
3. Comparison of the entity’s financial information with similar industry information, such as a comparison of the entity’s ratio of sales to accounts receivable with industry averages or with other entities of comparable size in the same industry.
4. Consideration of relationships among elements of financial information that would be expected to conform to a predictable pattern based on the entity’s experience, such as gross margin percentages.
5. Consideration of relationships between financial information and relevant nonfinancial information, such as payroll costs to number of employees