Substantive Procedures

Question 1

Non-current assets

Answer 1

Assertions: Existence, rights and obligations, completeness, valuation.

Question 2

Inventory

Answer 2

Inventory = Quantity x Value. Affects both the SFP and SPL. Attendance at the inventory count provides evidence of quantity and valuation.

Question 3

Receivables

Answer 3

Positive confirmations: Please confirm your agreement…
Negative confirmations: If you disagree this amount…
Try to use positive.

Question 4

Bank and Cash

Answer 4

Assertions: valuation, rights and obligations, existence.

Question 5

Payables

Answer 5

Assertions: completeness. The key risk is understatement, therefore one must test from reciprocal population back to accounts.

Question 6

Long-term liabilities

Answer 6

Assertions: Completeness, presentation, accuracy and cut-off.

Question 7

Statement of Profit or Loss

Answer 7

Audit approach should consist of: tests of control, analytical procedures, and tests of detail.

Question 8

Which matters should be referred to senior staff?

Answer 8

Conclusions, money laundering, exceptional items, unusual transactions, and any other issues.