1.4 - Substantive Procedures

Question 1

The auditor must ALWAYS carry out substantive procedures on…

Answer 1

Material items

Question 2

What substantive procedures must the auditor carry out?

Answer 2

• agreeing the financial statements to the underlying account records
• examining material journal entries
• examining other adjustments made in preparing the financial statements

Question 3

What two categories do substantive procedures fall into?

Answer 3

• analytical procedures
• other procedures (tests of details)

Question 4

What are analytical procedures appropriate for?

Answer 4

Appropriate for large volumes of predictable transactions (e.g wages/salaries)

Question 5

What are other procedures (tests of details) appropriate for?

Answer 5

Appropriate to gain information about account balances (e.g inventories or trade receivables), particularly in verifying the assertions of existence and valuation

Question 6

Tests of details rather than analytical procedures are likely to be more appropriate with regard to…

Answer 6

Matters which have been identified as significant risks, but the auditor must determine procedures specific to that risk which may include analytical procedures

Question 7

What is most difficult to obtain sufficient appropriate evidence about?

Answer 7

Significant risks