Lecture 7

Question 1

Substantive testing =

Answer 1

Performed on client’s data and underlying transactions

Question 2

Substantive testing made up of (2)

Answer 2

• Tests of detail

- Substantive Analytical Procedures

Question 3

Test of detail =

Answer 3

In depth tests eg inspection docs/ inquiry/ confirmation

Question 4

Substantive analytical procedure =

Answer 4

Auditors form expectation using mathematical relationships and key ratios

Question 5

3 considerations for determining level of substantive testing

Answer 5

• Assertions to be tested
• Level of risk attached to assertions
• Can we rely on any controls?

Question 6

Low RoMM and effective controls >

Answer 6

Only need to do SAP, no TOD

Question 7

High RoMM >

Answer 7

SAP and TOD

Question 8

Moderate RoMM >

Answer 8

Judgment to determine level ToD and SAPs

Question 9

Sampling for ToD (2)

Answer 9

• CAATS
• Manual > using specific criteria eg 1/3 PM. Must justify why selected, and ensure remaining balance doesn’t include material misstatement

Question 10

Materiality =

Answer 10

Audit difference threshold based on auditor judgement

Question 11

ToD errors above audit difference threshold are added to

Answer 11

Differences list

Question 12

At end of audit, differences list is..

Answer 12

Assessed to identify if misstatements are in excess materiality in aggregate