Auditing the Investment and Finance Cycle

Question 1

What substantive Procedures can one perform in order to gain comfort over the Opening Balance of Assets?

Answer 1

If they were previously audited

• In the event that you previously Audited them, you can agree the balance to the Prior year Work papers
• You can agree the amount to the signed Annual financial Statements, if you added them or they had another audit Opinion produced on them which wasnt modified.

if they were not previously Audited

• obtain a schedule from the client which lists all their assets that they had on hand at the beginning of the year which comprises of their opening balance (or filter the year end one for the ones that were purchased before the beginning of the year)
• Select a sample from the schedule of inventory items (ones that were purchased before the beginning of the financial year
• request invoices from Management for the items within the sample
• inspect the invoices to ensure that the purchase date of the item was before the beginning of the year\
• inspect the invoice to ensure that it was sent to the client that you are auditing
• inspect the invoice to ensure that the item you sampled is in the description of the invoice you are inspecting
• you could also enquire from management to physically direct you to the asset to ensure that it exists