Documents used for Substantive Procedures Flashcards
Receivables? (aged)
Aged receivables - slow moving balances
Receivables? (GDN - confirm shipped)
Goods despatched notes - confirms goods have been shipped to customer
Bank loan (lain documentation amount borrowed)
Loan documentation to confirm amount borrowed
How to compare amounts?
Documents
Ledger accounts AND/OR bank statements
Bank loan (con)
Bank confirmation letter to confirm outstanding balance
Bank loan (agreement covenant details)
Loan agreement for covenant details
Additions plant and equipment (supplier invoices valuation and rights)
Supplier invoices used for valuation and rights & obligations
Additions plant and equipment (non-current reg existence)
Non-current asset register used to confirm existence
Bank balances (bank rec additions arithmetic accuracy)
Bank reconciliation to check additions for arithmetical accuracy
Compare amonuts in the bank?
Using a bank statement AND cash book/bank ledger
Bank balances (lodg)
Lodgments - deposits/money received by a business but not received on bank statement
Legal claim (corr)
Correspondence between third parties
Payables (inv)
Purchase invoices received - use GRN to confirm timeframe
Payables (Goods timeframe)
Goods received note - used to confirm correct timeframe
Legal claims (bank statements payment made)
Post-year-end bank statements to determine whether payments been amde
Revenue (ss individual comparison prior)
Schedule of sales - used to determine sales of individual product lines and comparison to prior years
Revenue (inv agree master data)
Sales invoices - agreed back to a price list or customer master data information
Revenue (Goods)
Goods despatched notes - compared to sales invoice to confirm cut-off
Revenue (credit notes removed)
Credit notes - if found need to be removed from revenue
Revenue (gross)
Gross profit margin
Inventory (instr)
Count instriuctiuns - used to verify accuracy of count
Inventory (sequentially audit tests)
Sequentially numbered inventory sheets - for testing final audit
Inventory (goods)
GDNs and GRNs - to confirm cut-offs
Share capital (legal documentation share)
Legal documentation and share issue
Land and buildings (non)
Non-current asset register
Receivables (post receipts)
Post-year-end receipts - used to establish the amount of debt recovered
Provision (breakdown correct calculation)
Breakdown of restructuring provision - ensure correct calculation
Provision (ann)
Announcement - confirms when announcement was
Provision (post payments provision reasonable)
Post-year-end payments - determines whether provision is reasonable
Bank loan (schedule loans - changes)
Schedule of opening and closing loans - changes during the year
Receivables (credit allowance receivable required)
Post-year-end credit notes - determine whether allowance against receivables is required
How to agree goods in transit?
To a pre-year-end GDN
Receivables (iist sup)
List of individual suppliers - for identifying suppliers
Going concern (cash)
Cash flow forecast - does company have enough cash
Going concern (man)
Management plans - discussions for the future
Going concern (sales)
Post-year-end sales - determine if sales will increase
Inventory (WIP agree percentage count)
Breakdown WIP - agree percentage completed during count
Inventory (cost)
Cost sheets - raw material costs to purchase invoices.
Inventory (payroll)
Payroll records - agrees to labour costs
Inventory (ov)
Overheads allocated - ensure production related
Inventory (credit notes - write down)
Credit notes - determine whether write-down is required
Inventory (aged)
Aged inventory reports - determine slow moving inventory
Inventory (invoice NRV above)
Sales invoices - compare with cost to ensure NRV is above cost. Used to assess NRV
Intangible (market reports - sell product)
Market research reports - ability to sell product once complete
Sales tax liability (bank ledger cut-off)
Bank ledger account - confirms cut-off and completeness
Sales tax liability (corr tax payments due)
Correspondence with tax authority - additional payments due
Receivables (average)
Average receivables collection period - compare with prior years
What are the post documents in going concern?
Correspondence with suppliers
Board minutes
Management accounts
Intangible (invoice agree research development)
Invoice and supporting documentation - agree research costs and development capitalisation
Depreciation (exp budgets - last asset years)
Asset expenditure budgets - will asset last the number of years
Directors (liabilities confirm bonus)
Curernt liabilities - confirm bonus accrual
Directors (payroll confirm bonus payments)
Payroll records - confirm individual bonus payments
Receivables (confirm agreements evidence assigned security)
Confirmations and loan agreements - evidence receivables assigned as security
Redundancy provision (contracts completeness provision)
Employee contracts - confirm completeness of redundancy provision
Payables (credit notes no accrued)
Credit notes - ensure no further items accrued
Payables (suppleir statements reconcile)
Supplier statements - reconcile to supplier balances
Payables (individual supplier - goods received)
Individual supplier balances - identify goods received
Audit software (accruals - completeness)
Accruals listing - accuracy and completeness of accruals
Audit software (GRNs - cut-off)
Goods received notes - determine the cut off
Income (subscription - amounts trace bank ledger)
Subscription form - confirm amounts and trace to bank ledger and bank statement
Inventory (post sales invoice NRV)
Post-year-end sales invoices - determine if NRV is above cost
Inventory (audit - inventory issues)
Audit files - significant inventory issues arose last year
Rights issue (bank statements amount received)
Bank statements - amount received from rights issue
Supplier statements (in-transit GRN pre-year-end accruals)
Invoices in transit - ise GRM to ensure pre-year-end,therefore included in year-end accruals
Receivables (balance - documentation GDN existence)
Year-end receivables balances - supporting documentation and GDN to confirm existence
Revenue (member fee compare average reasonableness)
Membership fee - compare to average to assess reasonableness
When undertaking cut-off testing for purchases, which document should be used?
Use GRNs instead of purchase invoices
When undertaking cut-off testing for sales, which document should be used?
Use GDNs instead of sales invoices
What is reviewed for cash in transit?
Post-year-end bank ledger account
What is reviewed for goods in transit?
Pre-year-end goods despatch notes
What is used to assess whether NRV is above cost?
Post-year-end invoices
What are purchases invoices used for in inventory?
Raw materials
What are sales invoices used for in inventory?
Post-year-end sales to assess NRV
What is audit software used for?
To perform calculations and manipulate data
