Introduction to Auditing Individual Areas

Question 1

Auditing Procedures applicable to the 4 Assertions

Answer 1

1) Existence
2) Completeness
3) Rights and obligation
4) Valuation and allocation

Question 2

Existence

Answer 2

Related to the validity of recorded items.

Question 3

Completeness

Answer 3

Related to omissions of amounts that should have been recorded.

Question 4

Rights and obligation

Answer 4

Related to any restrictions to the entity’s rights to their assets or to the obligations for their liabilities.

Question 5

Valuation and allocation

Answer 5

Related to the appropriateness of dollar measurements.

Question 6

Substantive Procedures usually Performed in Every Individual Audit Area

Answer 6

1) Agree the financial statement elements (or the trial balance from which the financial statement elements are derived) to the underlying accounting records (i.e., to the general ledger).
2) Scan the entity’s journals and ledgers for any unusual items.
3) Make appropriate inquiries of management and other personnel (and document those important inquiries and management’s responses in the management representations letter).
4) Perform specific analytical procedures—consider historical trends and events within the industry.

Question 7

Test of controls are not ____

Answer 7

Substantive procedures