Overview of substantive procedures

Question 0

What do you do when it says the evidence is not sufficient enough?

Answer 0

Then you get additional evidence

Question 1

What is the objective of tests of details?

Answer 1

To detect material misstatements in financial statements

Question 2

What factor will likely influence a “fee determination” issue?

Answer 2

Complexity of accounting system

Question 3

Which factor would influence an auditors “testing”?

Answer 3

The existence of related party transactions

Question 4

Whig factor would influence an auditors determination of auditability of financial statements?

Answer 4

The adequacy of accounting records. The lack of adequate accounting records is a scope limitation which could prevent the auditor from obtaining more sufficient evidence to render an opinion.

Question 5

Inventory turnover?

Answer 5

Costs of goods sold/average inventory

Question 6

What factor impacts the auditors assessment of control risk?

Answer 6

Operative effectiveness of control procedures

Question 7

What is an element of professional judgment?

Answer 7

1) Determination of evidence to be gathered
2) determination of procedures to be undertaken to discover litigation, claims, and assessments
3) determination of pending legal matters to be included in the inquiry of the clients attorney

Specific procedures that are appropriate in the circumstances is a matter of professional judgment

Question 8

What is the element of audit planning that would have to be most likely agreed with the client before the implementation of the audit strategy?

Answer 8

The determination of the timing of inventory observation procedures to be performed. The auditor would need to be informed as to the timing of and the procedures related to the physical inventory-taking by the client.