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Substantive audit procedures for cash
Substantive audit procedures for cash
Evaluation of compliance with corporate policies and procedures. 1. This quiz and attached worksheet will help gauge your understanding of substantive procedures in auditing. Inspection. Considering Gutzler's internal control over cash receipts and standard auditing procedures already performed, list all other auditing procedures and reasons therefore which should be performed to obtain sufficient audit evidence regarding cash receipts. As opposed to the testing of controls, substantive procedures focus on amounts and include detailed testing of classes of transactions Substantive procedures of cash receipts and payments transactions. Use one standard form to confirm not only deposits, but also loan balances and related independent party such as the internal auditor reviews the bank reconciliation. Vouch plant asset additions to purchase documents. The auditor’s use of substantive analytical procedures for auditing cash is limited to comparisons with prior years’ cash balances and to budgeted amounts. Beasley · Frank A. 5. The assessment of control risk affects the nature, timing , and extent of substantive audit procedures. Instructions: The auditor should refer to the audit planning documentation to gain an understanding of the financial reporting system and the planned extent of testing for accrued liabilities.
There are situations where exams questions are unanswered not because of time pressure, but such questions may be considered difficult. Writing irrelevant audit procedures – for example, when you are asked to write audit procedures relating to depreciation of a non-current asset, it Example audit procedures --perform a thorough review of original source documents including: invoices, shipping documents, customer purchase orders, cash receipts, and written correspondence between the client and customer --analyze and review credit memos and other A/R adjustments for the period subsequent to the balance sheet date Subsequent Cash Reciepts. Examination of other client documentation. If the results of substantive procedures are not as expected, additional procedures may be added to the audit plan. (05 marks) F8 (ACCA - December 2010) You are the audit manager at Hawthorn Enterprises Co (Hawthorn). deficiencies in the bank reconciliation process that were identified in prior audit reports. How does substantive audit approach is perform? As we mentioned above, the substantive audit approach is focus more on vouching. Auditing – Study Notes Chapter 12 Substantive Procedures CONCEPT REVIEW QUESTION Describe substantive procedures the auditor should perform on the year-end trade payables of audit client. Types of substantive tests of detail include: Examination - Examining physical or electronic evidence (e. The audit procedure in case of audit of shares issued for cash can be studied in three stages, as below: Treasury and Cash Management Audit Work Program This document includes two sample treasury and cash management work programs that focus on adequacy of controls, overall efficiency and effectiveness of processes, and compliance with policies and procedures. JUNE 2007 - The Auditing Standards Board (ASB) issued its long-anticipated risk assessment audit standards in March 2006: Statements on Auditing Standards (SAS) 104 through 111, which bring sweeping changes and provide definitive guidance for the conduct of audits of nonpublic companies. To determine compliance with the applicable policies and procedures, we performed surprise petty cash and imprest cash audit for 11 petty cash and imprest fund totaling $73,050.
There are 7 audit procedures includes observation, inquiries, inspection, reperformance, recalcuation, confirmation, analytical procedure. Based on planning procedures performed, obtain UAC management approval to adjust initial budgeted hours (if applicable) and/or program steps to be performed. Preparing a schedule of interbank transfers for a period of 10 business days before and after year-end date. One of the above posts mentioned that substantive procedures/analytical procedures utilize ratios. 12-25 (Types of substantive tests and audit objectives) Audit procedures used in performing substantive tests during the audit of the Harris Company are as follows: 1. Accounts payable balances at the balance sheet date may not be paid before the audit is completed. Verification procedures should also be used whenever: • Account records are significantly out of balance. AuditWatch is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. from cash book and trace to Cash audit procedures determine how many individuals handle cash at the main collection point. Count cash on hand. During your audit, you need to test management financial statement assertions. a manufacturing company for the year ended June 30, 20x8 and have been presented with a draft set of fi How does substantive audit approach is perform? As we mentioned above, the substantive audit approach is focus more on vouching.
Substantive testing is part of substantive audit approach and it is performing at the execution stage of audit. Design and perform tests of controls and assess the related control risks over the purchase and payment cycle. It is different from testing of controls, which are procedures that test the systems/policies that give rise to the numbers. 5000 2. We’ve discussed how to perform cash risk assessment procedures, the relevant cash assertions, the cash risk assessments, and substantive cash procedures. has realized that there is a risk of losing money because of irregularities in cash, payroll, and accounts payable. Revenues - Substantive procedures. bank and cash balances. I. Lillian Stockton, the treasurer, prepares the monthly bank reconciliation. Audits the activities and various functions of investment operations, as drected by the audit plan and requested by management, to insure proper internal controls and compliance with internal policies and procedures. When you test cash disbursements during an audit, your first job is to figure out how your audit client pays its invoices.
These tests are needed as evidence to support the assertion that the financial records of an entity are complete, valid, and accurate. inventories 2. Our audit procedures disclosed many internal control weaknesses relating to the Clerk’s organizational Suggested Audit Procedures - Compliance (Substantive Tests) PART III. Ok, good. Topics you will need to know in order to pass the quiz Auditing prepaids is usually a simple task. What is the difference between compliance testing and substantive testing? Raj commenced business with cash Rs. But I think, depending on what item you're auditing (Cash, AR, AP, whatever), ratios are only going to give you so much info. ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 5 - 5 Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Expense auditing is a fundamental risk management task that’s often critical to a company’s profitability. In each phase, certain procedures are often used. Obtain or prepare a lead schedule of cash and bank Hello Sir, I have some inquire for the substantive procedure for verifying the cash and bank balance Below are some extract from the answers: 1)”Trace all unpresented cheques through to a pre year-end cash book and post year-end statement. Examples of accounting estimates include periodic depreciation, the provision for bad debts, net realizable value of inventory, revenues from contracts accounted for by the Vouching of Wages – Audit Procedure and Guidelines to Auditors. The prepaid expense originates in the purchases process, so good controls in that business process carry over to the prepaid process.
Substantive procedures are included in the audit plan around which an audit is structured. Design and Perform Tests of Details of Balances for Liability and Expense Accounts (Phase III) (a) List THREE substantive analytical procedures you should perform on the shift managers’ salary system. Cut off testing 1. Substantive tests therefore include analytical procedures in addition to the four classes of audit procedures available for testing controls, so giving the well-known mnemonic AEIOU: Analytical procedures. Inventory Audit Procedures. Accordingly, the auditor may decide to decrease the amount of substantive testing, omit certain procedures, and/or schedule interim testing. Analytical Procedures •Preliminary analytical procedures: • analytical procedures must be performed while planning the audit with an objective of identifying the existence of unusual transactions or events, and amounts, ratios, and trends that might indicate matters that have financial statement and audit planning implications. affecting bank and cash balances. An audit plan of substantive procedures for cash would not include A. 3. 4. 2.
,Financial Institution Confirmations Confirmations are the most common substantive audit test for cash. ?UOP ACC 556 Week 3 Learning Team Substantive Procedures for Cash Outflow Irregularities Resource: Apollo Shoes Casebook Outline substantive procedures by using the Apollo Shoes Casebook for detecting irregularities in each of the following audit cycles: • Cash • Accounts payable • Payroll Design an audit program for the cycle in no more than 1,050 […] The Lakeside Company: Auditing Cases AUDIT RISK AND ANALYTICAL PROCEDURES On June 28, 2012, Richard Abernethy, managing partner of Abernethy and Chapman, met with the firm’s three-member engagement review committee to discuss the Lakeside Company audit. Audit procedures for receivables AUDIT PLAN: RECEIVABLES Completeness Agree the balance from the individual sales ledger accounts to the aged receivables’ listing and vice versa. Describe the . PART III. The following audit procedures were used to achieve the audit objectives: • Counted fiscal year 2007 cash receipts deposited on July 2 A substantive test of detail is a type of audit procedure that may be performed to address an identified risk of material misstatement of the financial statements. I have ignored the name 27. Analytical Procedures CPA P1 Auditing TOPIC 34: SUBSTANTIVE AUDIT PROCEDURES - INVENTORY IMPORTANCE OF INVENTORY Inventory is important to the audit for many reasons: In many companies, it is likely to be a very material figure (and is included both in the Statement of Financial Position and the Statement of Profit or Loss). Previous Next. . Tweet Append below are some notes pertaining to understand what is Substantive Procedures and its purposes in audit: Substantive Procedures In An Audit Substantive Procedures are tests designed to obtain evidence to ensure the completeness, accuracy and validity of the data produced by the accounting system. The first four are belongs to test of control, the last three are part of substantive procedures.
A11 Substantive analytical procedures are generally more effective for VERIFICATION (SUBSTANTIVE PROCEDURES) Auditing Homework Help, Online Auditing Assignment & Project Help 1. Analytical Procedures 2. Equipment and Real Property Management . Because expenses reduce revenue, basic audit procedures help preserve the bottom line, particularly when processing expense reports, which is a common task for bookkeepers and accountants. Reliance helps you reduce amount of substantive testing at year end (if determine that reliance is justified) Substantive testing can be done during the year If a public company, you have to do quarterly reviews, why not apply some audit procedures to significant activities at that time Must update through year end Substantive Procedures for Cash Outflow Irregularities The management of Apollo Shoes Inc. 14-30 (Substantive tests of accounts receivable) The following situations were not discovered by an inexperienced staff auditor in the audit of the Parson Company. Writing impractical procedures – for example, suggesting a segregation of duties between the person authorising petty cash vouchers, recording petty cash vouchers and dispensing the petty cash. A29) . Verify the Cash Valuation 6. A substantive test of detail is a type of audit procedure that may be performed to address an identified risk of material misstatement of the financial statements. And this will take more audit time. Observation.
Substantive Audit Program- Cash Balances Assertions: 1. Design and perform substantive procedures of transactions over the purchase and payment cycle. Substantive procedures for Cash may include: Performing cash counts at a sample of sites/tills and reconciling them to till records and/or cashbooks o Planning for a cash count: o Best if all locations counted at the same time o Cash may include unbanked cheques received, credit card slips in addition to notes and coin Because of the residual nature of the cash account, the auditor's use of substantive analytical procedures for auditing cash is limited to comparisons with prior years' cash balances and Considering Gutzler's internal control over cash receipts and standard auditing procedures already performed, list all other auditing procedures and reasons therefore which should be performed to obtain sufficient audit evidence regarding cash receipts. Enquiry and confirmation. Nature: Refers to the type of procedures, and the mix of those procedures, to address the audit risk for each account-assertion. For confirmation requests that are not returned by customers, auditors must perform alternative procedures to verify the accounts receivable balance. The auditor must obtain reasonable assurance that the cash balances of the Start studying F8 ACCA - Substantive procedures for Cash and Bank balances. payables 4. document the controls in place. Recalculate accrued interest on notes payable. Substantive Analytical audit procedure on depreciation. C.
substantive audit procedures . The amount of the petty cash and imprest fund accounts audited constitute 81% of the 79 funds totaling $89,925. 9. To do so, the auditor will request proof that the customer balances selected for confirmation have been paid since the company's fiscal year end. bank and cash 5. Select items on the floor and trace test counts of those items to the inventory listing/floor to sheet -C (1) What are the substantive procedures to test account payable? What is the relationship between audit risk and test of controls and When the CPA compares the book balance of cash to the book . Analytical Procedures Audit Procedures & Accounting Standards & Entries: Substantive audit procedures reflect requirements of accounting standards and basic book-keeping entries. Audit Implications Summary. Confirm accounts receivable. Obtain understanding of internal control. We performed a cash count on July 2, 2007 and examined reconciliations for the months of May, June and July 2007. Match the total of the aged receivables’ listing to the sales ledgers control account.
The appropriate procedures are: Make inquiries. Audit Procedures & Accounting Standards & Entries: Substantive audit procedures reflect requirements of accounting standards and basic book-keeping entries. necessary to audit the assertions relevant to bank and cash balances. bank reconciliation. As a substantive significant concern about the quality, scope or depth of the external audit. Audit Procedures. Select items on the inventory listing and take test counts/sheet to floor-E(1) b. It can be difficult for students who don’t have auditing experience to make sense of the differences between substantive analytical procedures and tests of detail. That mean when auditor perform an audit on financial statements by using substantive approach, most of the event and transactions of elements in financial statements are selected and verified. For each procedure, state your expectation of the result of that procedure. Substantive procedures for cash outflows, accounts payable, and payroll are needed to detect irregularities in each of these. In addition, although not required , analytical procedures may be used as a substantive test when they are more effective or efficient than tests of details.
Accounting and auditing procedures differ across companies and industries but audit procedures for cash are similar. Businesses that maintain petty cash to pay for small, on-demand necessities should implement proper petty cash audit testing procedures to ensure that employees use petty cash for appropriate reasons and properly account for the petty cash as used. Occurrence / Existence Select samples of cash receipts. F. 2 concluding the auditconcluding the audit For more information regarding refund, complaint, and program cancellation policies, please contact our office at 1-800-775-9866. Auditing: Substantive analytical procedures versus Substantive tests of detail. Bought goods from Kiran for cash Rs. In this short article we set out the key differences between the two tests. Do not discuss the procedures for cash disbursements and cash balances. from cash book and trace to . Substantive Analytical Procedure- Cash. Or, is the ratio analysis done with numbers obtained in substantive procedures? PPTs t/a Auditing and Assurance Services in Australia by Gay & Simnett Slides prepared by Roger Simnett 10 APPROACH IN AUDITING CASH BALANCES •Determined by assessed level of control risk in bank and cash handling procedures.
Perform Substantive Analytical Procedures (Phase III) The use of substantive analytical procedures is as important in the payroll and personnel cycle as it is in every other cycle. CASH AND BANK BALANCES Consider results of tests of controls over cash receipts and disbursements. In order to detect irregularities in these three areas, substantive procedures are necessary. Inspect manuals and other documentation. Substantive procedures are methods of verifying the actual numbers on financial statements. @ Chapter l4 will help you learn the methodology for designing tests of controls and substantive tests of transactions audit procedures for sales, cash receipts, and the other classes of How to Test Internal Controls of an Organization Disclosures Required for Cash Accounting timing and extent of other audit procedures. (Checked with procedure 12) 4. Modification to the auditing procedures listed below may be necessary in order to achieve the audit objectives. Misstatements are normally immaterial and easily fixed with a journal entry. In considering whether to perform substantive procedures at an interim date the auditor considers such factors as the following: Differentiate substantive audit procedures related to specific audit assertions; Identify the best approaches to audit documentation; Recognize typical key controls related to the audit assertions in Inventory and cost of goods sold; Recognize analytical review as a substantive procedure for inventory and cost of goods sold When substantive procedures are performed at an interim date, the auditor should perform further substantive procedures or substantive procedures combined with tests of controls to cover the remaining period that provide a reasonable basis for extending the audit conclusions from the interim date to the period end. Types of Substantive Procedures: This substantive analytical one type of analytical procedure, to obtain evidence in a particular assertion relates to account balance and transaction classes. substantive procedures or substantive procedures combined with tests of controls to cover the remaining period that provide a reasonable basis for extending the audit conclusions from the interim date to the period end.
All cash has been recorded. (Checked with procedures 3, 5 and 7) 3. Describe the substantive audit procedures to audit a . Examination of subsequent cash receipts. receivables 3. Audit Objectives and Control Procedures. (checked with procedure 3, 5 and 7) 2. substantive audit procedure is a direct test of a financial statement balance designed to detect material misstatements at the assertion level. Here's a short video about responding to identified risks with substantive Substantive tests therefore include analytical procedures in addition to the four classes of audit procedures available for testing controls, so giving the well-known mnemonic AEIOU: Analytical procedures. I like to give my KnowledgEquity students plenty of examples and questions to understand and apply Audit Procedures on Accounting Estimates An accounting estimate is an approximation of a financial statement element, item, or account in the absence of exact measurement. MULTIPLE CHOICE: 1. c.
The work performed by internal auditors may be a factor in determining the nature, timing, and extent of the independent auditor's procedures. A28–. The audit report to be delivered to owners within 120 days of the HOA’s fiscal year end; HOA’s with annual revenues more than $400,000 must have an audit by a CPA; HOA’s with annual revenues of $400,000 or less must have a review, compilation, or report of cash receipts and expenditures by a CPA. (Apollo) is the designing of an audit program, which will detail substantive procedures for detecting irregularities in the accounts receivable, inventory, and fixed assets audit cycles. I like to give my KnowledgEquity students plenty of examples and questions to understand and apply Substantive analytical procedures 475 Substantive detail tests 480 Reporting Phase Section Perform overall analytical procedures 520 Determine adequacy of audit procedures and audit scope 530 Evaluate misstatements 540 Conclude other audit procedures: 550 Inquire of attorneys Consider subsequent events Assignment Substantive Procedures for Cash Outflow Irregularities Resource: Apollo Shoes Casebook Outline substantive procedures by using the Apollo Shoes Casebook for detecting irregularities in purchases, sales, income transactions, portfolio composition, cash management and other investment related activities. This Checklist for an Internal Audit is intended to assist microfinance institutions (MFIs) in developing their internal audit capacities. QUESTIONS AND ANSWERS Auditing Homework Help, Online Auditing Assignment & Project Help You are due to commence the final audit of ABC Ltd. Know about the audit objectives of collecting evidence in purchases and cash payments transactions and creditors’ balances. risks of misstatement . Or, is the ratio analysis done with numbers obtained in substantive procedures? 4. Audit evidence includes that obtained from audit procedures performed during the course of audit, but may include audit evidence obtained from other sources, such as previous audits and a firm’s quality control procedures for client acceptance and continuance Some points to add to and one correction, with all due respect, to Meghana Sarma's answer. Goods billed were not shipped.
performing other audit procedures as necessary in the circum-stances. Process Steet's Financial Audit Checklist has condensed the financial audit procedure into the following tasks: Engagement acceptance Planning Audit testing Account analysis Substantive Procedures Reporting The earliest surviving mention of a financial audit like procedure dates back to the 13th century. There are two types of substantive procedures. Topics you will need to know in order to pass the quiz My response to higher risk assessments is to perform certain substantive procedures: namely, a search for unrecorded liabilities and detailed expense analyses. Table Of Contents. g examining a purchase invoice) Substantive Analytical Procedures: Revenue, Cash, and A/R Substantive Analytical Procedures – the comparison of quantitative relationships among account balances and other indicators to an auditor’s expectations. Deferred charges The table below summarizes specific audit objectives related to financial statement assertions for accounts receivable and identifies common, but not all inclusive, substantive audit procedures that accomplish these objectives. SUBSTANTIVE PROCEDURES Fundamentals of Auditing Commerce Auditing Audit procedures. YEAR END SUBSTANTIVE PROCEDURES ARE ALWAYS MORE RELIABLE. Audits should also ensure that the cashier and front office manager log and sign off on money before it enters or leaves a safe. For cash disbursement transactions you need to test five assertions: occurrence, completeness, authorization, accuracy, and cutoff. The amount of cash is not materially more than the amount shown on the balance sheet.
Substantive Procedures for Cash Outflow Irregularities The management of Apollo Shoes Inc. In broad sense following procedures can be performed, 1. How to Audit Cash How to Audit Equity How to Audit Fixed Assets How to Audit Inventory How to Audit Liabilities Substantive Procedures Defined. To prevent over-auditing, the amount of audit work necessary must depend on the assessed levels of risk of material misstatement (RMM) at both the financial statement and classification (assertion) levels. Cast and cross -cast of the aged trail balances before selecting Tests of control and substantive testing come up in the Principles of Audit and Reporting course, and are a topic that can sometimes be confusing. For each audit done in accordance with GAAS, the auditor must obtain an understanding of internal control. There are many chances of misappropriation of cash under the banner of wages. Substantive audit procedures on disposal (This is important if there are any profit/loss on disposal of assets during the auditing period) 5. Evaluating the Audit Findings When the auditor has completed the planned substantive procedures, the likely misstatement for accounts receivable is determined. RecalcUlation and reperformance Learning "how" to audit cash is mainly learning "when" to audit cash and to "what extent" cash auditing procedures should be applied. Glover · Douglas F. • Management is uncooperative or poorly manages the bank and substantive deficiencies remain unresolved from prior OCC examinations or internal audits.
cash for the sale. b. non current assets 6. 1000 3. Expense auditing is a fundamental risk management task that’s often critical to a company’s profitability. In addition, substantive testing methods included analytical procedures, tests of detail using sampling methods, as well as confirmation of transactions. Substantive procedures comprise tests of details (classes of transactions, account balances, and disclosures), and substantive analytical procedures. The accounts receivable turnover ratio was far below expected results. Prawitt LEARNING OBJECTIVES After completing and discussing this case you should be able to  Understand the objectives of substantive audit procedures relating to the audit of cash balances  Consider the effectiveness and reliability of audit procedures  Identify Observe the client's physical inventory counts a. Examination of customer orders, shipping documents and duplicate sales invoices. This is a duplication of cutoff tests. remittance advices, pay-in slips, and bank statement.
Reviewing Bank Reconciliations 4. Only cashiers and front office managers should handle money as it comes into the business. Suggested Audit Procedures -Compliance (Substantive Tests For more information regarding refund, complaint, and program cancellation policies, please contact our office at 1-800-775-9866. Audits are conducted in various phases. How to Audit Cash How to Audit Equity How to Audit Fixed Assets How to Audit Inventory How to Audit Liabilities independent party such as the internal auditor reviews the bank reconciliation. Select samples of cash payments. NOTE: Advance UAC management approval required. How would substantive procedures for accounts payable be affected by a high risk of material misstatement? CR up, DR down, SP up: Describe the purpose and give examples of audit procedures in the search for unrecorded liabilities. Objectives of the Review 1. Procurement and Suspension and Debarment . Description Accounts receivable/credit & collections audit program Revision Info This program was last reviewed/updated on [Click to Insert Date here] Step Audit Procedure Perf’d/ Approved By Workpaper Reference I. Cash – Substantive Testing CAS 500 – Audit evidence CAS 505 – External confirmations CAS 520 – Analytical procedures Cash Receipts and Cash Balances Most companies require little authorization to accept payments from customers.
It should be considered a template for creating a similar checklist more specific to the operations of your particular MFI. Requesting the client to prepare bank reconciliations. Substantive Procedures for Cash Outflow Irregularities Apollo Shoes has recognized that there is a risk of loss due to irregularities in cash outflows, accounts payable, and payroll. List of Substantive Audit Procedures; Evidence in Specific and it responding to risk assessment. Obtain Cutoff Bank Statements and Confirmations returned by the bank, scan and review. Learn vocabulary, terms, and more with flashcards, games, and other study tools. (2 points each, 92 points total) Read the following questions carefully and indicate the one best answer to each question by placing a mark on the appropriate space on the answer sheet. It needs to be adjusted to match the terms and methodology used in your MFI and your What is the difference between compliance testing and substantive testing? Raj commenced business with cash Rs. The importance of developing an audit program that includes thorough procedures to audit cash balances, or cash receipts, is important because it can affect an organization's profits. Cash Management. Related Courses. Mark S.
B. Apply the frameworks for professional decision making and ethical decision making to issues involving the audit of revenue cycle accounts, disclosures, and assertions Instructions: The auditor should refer to the audit planning documentation to gain an understanding of the financial reporting system and the planned extent of testing for accrued liabilities. The vouching of payment of wages is an important duty of an auditor. Buckless· Steven M. Specific Audit Objectives Common Substantive Audit Procedures Financial Statement Assertions Accounts receivable reflected substantive audit procedures for testing revenue cycle accounts, disclosures, and assertions . CHAPTER 9 AUDITING THE REVENUE CYCLE customers Collecting cash Recognizing effect of this process on other related accounts IDENTIFY AND ASSESS INHERENT RISKS OF Auditing prepaids is usually a simple task. (Ref:par. Auditing Cash & Bank balance involves several audit procedures. Calling Confirmations 3. Based on planning procedures performed, tailor testing procedures (if necessary) to meet audit objectives and scope. 1 The substantive procedures: Audit Objectives Substantive Procedures 1. Substantive Audit Procedures: Cash Balances.
Auditor confirmation of accounts payable balances at the balance sheet date may be unnecessary because . About This Quiz & Worksheet. (6 marks) (b) Audit evidence can be obtained using various audit procedures, such as inspection. Substantive testing or substantive procedure is the technique use by auditor to obtain the audit evidence in order to support auditor opinion. final review stage. Next we’ll examine how to audit receivables and revenues. Several accounts were incorrectly aged in the client's aging schedule. A substantive procedure is a process, step, or test that creates conclusive evidence regarding the completeness, existence, disclosure, rights, or valuation (the The points I have discussed here, are more like basic audit procedures to audit cash and cash equivalents. Deferred charges Auditing Revenue and Related Accounts and discusses the substantive audit procedures relevant to revenue cycle accounts. Notes Paper exam CBE. Physical verification 5. Specific Audit Objectives Common Substantive Audit Procedures Financial Statement Assertions Accounts receivable reflected DOCUMENTS RELATING TO AUDIT PROGRAM C-2 Audit Program Audit Program for Cash For the Year Ended December 31, 2004 Audit Procedures Initial Date Ref.
2. The following audit procedures were used to achieve the audit objectives: • Counted fiscal year 2007 cash receipts deposited on July 2 We'll first look at one important part of every audit, the sales and collection cycle, to examine the practical application of auditing concepts. Subsequent Cash Reciepts. Syllabus D4a) Explain the audit objectives and the audit procedures in relation to: Cash audit procedures determine how many individuals handle cash at the main collection point. You also obtained from Don selected portions of the cash receipts and cash disbursements journals. explain the purpose of substantive procedures in relation to financial statements assertions explain the substantive procedures used in auditing each balance, and tabulate those substantive procedures in a work program, for the following areas: 1. techniques for auditing revenues and expenses techniques for auditing revenues and expenses. Substantive Procedures – Asset Irregularities Essay Sample. g examining a purchase invoice) Auditing – Study Notes Chapter 12 Substantive Procedures CONCEPT REVIEW QUESTION Describe substantive procedures the auditor should perform on the year-end trade payables of audit client. Introduction This next phase of the auditing process for Apollo Shoes Inc. It is different to test of control. VERIFICATION (SUBSTANTIVE PROCEDURES) Auditing Homework Help, Online Auditing Assignment & Project Help 1.
The nature of Learning "how" to audit cash is mainly learning "when" to audit cash and to "what extent" cash auditing procedures should be applied. Requesting a cutoff bank statement be mailed to the client. There could be more depending on the business and operation type. a. Multiple Choice. The objective of the search is to search anywhere where evidence of liabilities could exist Accounting 408 Name _____ Exam 2 Chapters 4-6, E Row _____ I. Apt Financial Consultants CPA Reviews SUBSTANTIVE PROCEDURES FOR VARIOUS FINANCIAL STATEMENTS ITEMS INTRODUCTION The auditor must obtain sufficient, appropriate evidence to be able to give the audit opinion on the truth and fairness of the financial statements. Wally’s Billboard & sign Supply the audit of cash. Factors Impacting the Audit of Cash - Testing performed at an interim stage over cash receipts and disbursements - If controls are effective, no additional test of control is required to be performed - Thus, the auditor would perform substantive tests to audit cash at year end with no additional process or control related testing required Substantive Audit Testing: Expenditure Cycle. •Much of this information will come from evaluations and tests of controls in the substantive audit procedures for testing cash accounts, disclosures, and assertions Identify types of marketable securities, articulate the risks and controls typically associated with these accounts, and outline an audit approach for testing these accounts Apply frameworks for professional decision making and ethical decision making to issues Audit of Shares Issued for Cash. az Choice "b" is correct. Don McKenna provided you with a copy of the reconciliation for the month of December, 2009.
So analytical procedure is also test the reasonableness of items in FS. The procedures performed by the internal audit staff may eliminate the independent auditor's need for an extensive study and evaluation of internal control. The auditor Substantive audit procedures are the activities that auditors perform to assess the risk of material misstatements or instances of fraud at the assertion level. Substantive testing is an audit procedure that examines the financial statements and supporting documentation to see if they contain errors. CPA P1 Auditing TOPIC 34: SUBSTANTIVE AUDIT PROCEDURES - INVENTORY IMPORTANCE OF INVENTORY Inventory is important to the audit for many reasons: In many companies, it is likely to be a very material figure (and is included both in the Statement of Financial Position and the Statement of Profit or Loss). ©2012 Prentice Hall Business Publishing, Auditing 14/e, Arens/Elder/Beasley 5 - 5 Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts deficiencies in the bank reconciliation process that were identified in prior audit reports. Cash is correctly shown as a current asset. Audit Method: The Unrecorded Liability Liability is defined in Conceptual Framework of International Financial Reporting Standards as “ a present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits”. Conversely, weak internal control will likely result in increased substantive testing, the need for additional audit procedures, and/or scheduling testing at or after year-end. Tests of control and substantive testing come up in the Principles of Audit and Reporting course, and are a topic that can sometimes be confusing. Analytical Procedures Objectives for the Audit Cash Consider the inherent risksrelated to cash, including fraud risks Consider internal controlover cash transactions Substantiate the existenceof recorded cash Establish the completenessof recorded cash Determine that the client has rightsto recorded cash and has made a proper Cutoff The table below summarizes specific audit objectives related to financial statement assertions for accounts receivable and identifies common, but not all inclusive, substantive audit procedures that accomplish these objectives. Understand the .
The particular expense accounts that I examine are often the result of my preliminary planning analytics. RecalcUlation and reperformance About This Quiz & Worksheet. substantive audit procedures for cash
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