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AA Question Rote > Substantive Procedures Rote 3 > Flashcards

Substantive Procedures Rote 3 Flashcards

1
Q

Sale of defective goods (review correspondence company details claim obligations past occurred)

A

Review correspondence with company and establish details of claim to assess whether present obligation of past event has occurred

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2
Q

Sale of defective goods (review correspondence company liability defect)

A

Review correspondence with company top asssess whether they accept liability for the defect

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3
Q

Sale of defective goods (discuss management customers problems likelihood)

A

Discuss with management to whether other customers have experienced problems and likelihood of future claims

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4
Q

Sale of defective goods (review minutes claim directors successful)

A

Review board minutes to establish whether directors believe either claim successful or not

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5
Q

Sale of defective goods (review post bank ledger payments made)

A

Review post-year end bank ledger account whether payments have been made customer

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6
Q

Sale of defective goods (obtain written lawsuit successful provision receivable required)

A

Obtain written representation confirming with management’s views is likely successful and hence a provision for receivable is required

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7
Q

Sale of defective goods (review disclosures IAS 37)

A

Review the adequacy of disclosures to ensure they are in accordance with IAS 37

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8
Q

Potential breach of regulations (review correspondence authority complaint breach occurred)

A

Review correspondence with transport authority to establish details of compliance and number of times breach occurred

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9
Q

Potential breach of regulations (Enquire directors disclosure accept breaches)

A

Enquire with directors why they are unwilling to make disclosure and whether they accept breaches took place

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10
Q

Potential breach of regulations (Review driving hours compare regulations breaches)

A

Review policies and procedures to record driving hours and compare regulations to determine likelihood breaches have occurred

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11
Q

Potential breach of regulations (Review board management likelihood authority)

A

Review board minutes to determine management’s view of the likelihood of payment from the authority

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12
Q

Potential breach of regulations (Obtain representation directors breaches)

A

Obtain written representation to effect directors not aware of breaches of regulations which would require a provision or disclosure in FSs

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13
Q

Potential breach of regulations (Inspect post-year account statements fines)

A

Inspect post-year-end bank ledger account and bank statements to identify whether fines have been paid

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14
Q

Potential breach of regulations (Review correspondence lawyers likelihood breach fines payable)

A

Review correspondence with legal advisers, contact lawyers to establish assessment of likelihood of breach being proven and fines payable

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15
Q

Going concern (obtain forecast cash in outflows company cash)

A

Obtain company’s cash flow forecast and review the cash in and outflows to determine if company will have enough cash

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16
Q

Going concern (calculate sensitivity cash flows understand margin)

A

Calculate sensitivity analysis on cash flows to understand margin of safety the company has

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17
Q

Going concern (review management’s plans actions feasibility)

A

Review management’s plans for future actions and consider the feasibility of these plans

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18
Q

Going concern (review post year-end sales levels trade increase)

A

Review company’s post-year end sales to assess whether levels of trade are likely to increase

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19
Q

Going concern (review agreements bank determine covenants breached)

A

Review any agreements to bank to determine whether any covenants have been breached

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20
Q

Going concern (enquire lawyers litigation)

A

Enquire with lawyers the existence of litigation

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21
Q

Going concern (Review post-year end suppliers legal action)

A

Review post-year-end correspondence with suppliers to identify if any have threatened legal action

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22
Q

Going concern (Consider going cocnern appropriate preparation FSs)

A

Consider whether going concern basis is appropriate for preparation of FS

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23
Q

Going concern (Review post-year board issues identify financial company)

A

Review post-year-end board minutes to identify other issues that might indicate further financial difficulties for the company

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24
Q

Going concern (Obtain representation directors going)

A

Obtain written representation that directors view of COMPANY is a going concern

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25
Q

Going concern (Perform subsequent events risk concern not appropriate)

A

Perform audit tests in relation to subsequent events to identify any items which indicate risk of going concern not being appropriate

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26
Q

Research and development (obtain schedule closing general ledger)

A

Obtain schedule of intangible assets, agree closing balance to the general ledger

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27
Q

Research and development (discuss rationale director useful life)

A

Discuss rational and reasonableness with director for the useful life

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28
Q

Research and development (discuss management stage development capitalised expensed)

A

Discuss with management stage of development for project and whether it is capitalised or expensed

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29
Q

Research and development (expensed costs invoices documentation inclusion SPL)

A

For research expenses, agree costs to invoices and supporting documentation to inclusion in SPL

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30
Q

Research and development (capitalised development costs invoices)

A

For capitalised development, agree costs incurred to invoices

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31
Q

Research and development (confirm feasibility discussion managers)

A

Confirm feasibility of project by discussion with managers

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32
Q

Research and development (review market sell products probable economic benefits)

A

Review market research reports to confirm company has ability to sell product once complete and probable economic benefits arise

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33
Q

Research and development (review disclosure intangible verify IAS)

A

Review disclosure for intangible assets in draft FSs to verify accordance with IAs 38

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34
Q

Bank balances (Obtain bank confirmation bankers accounts)

A

Obtain bank confirmation letter from company’s bankers for all its accounts

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35
Q

Bank balances (Agree accounts bank confirmation reconciliations trial balance)

A

Agree all accounts listed on bank confirmation letter to company’s rec on general ledger for completeness

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36
Q

Bank balances (Obtain rec additions arithmetical accuracy)

A

Obtain bank reconciliation and cast to check the additions to ensure arithmetical accuracy

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37
Q

Bank balances (Agree balance account year-end)

A

Agree rec’s balance per bank ledger account to year-end bank ledger account

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38
Q

Bank balances (Examine unpresented cheques need written back)

A

Examine old unpresented cheques to assess whether need to be written back

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39
Q

Bank balances (review ledger unusual large dressing)

A

Review the bank ledger and bank statements for unusual items or large transfers, this could be evidence of window dressing

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40
Q

Bank balances (unpresented cheques pre-year ledger statement management amounts)

A

Trace unpresented cheques through pre-year-end ledger and post-year-end bank statement. Obtain management explanations for unusual amounts

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41
Q

Bank balances (review reconciling rec documentation)

A

Review rec items on year-end bank rec and agree supporting documentation

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42
Q

Bank balances (review FS disclosure balances classified assets liabilities)

A

Review FSs ensure disclosure of bank balances is accurate and classified appropriately between current assets and current liabilities

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43
Q

Bank balances (trace lodgements pre post paying book)

A

Trace outstanding lodgments to pre-year-end bank ledger, post-year-end bank statement and pre-year-end paying-in book

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44
Q

Research and development (discuss details project capitalised expensed)

A

DIscuss with management details of each project along with stage of development and whether it’s been capitalised or expensed

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45
Q

Director’s bonuses (Obtain schedule paid schedule amount FSs)

A

Obtain schedule of director’s bonus paid and cast schedule to ensure agrees to amount in FS

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46
Q

Director’s bonuses (Review liabilities accrual year-end liabiltiy)

A

Review schedule of current liabilities and confirm bonus accrual is included in year-end liability

47
Q

Director’s bonuses (Agree bonus payroll records)

A

Agree individual bonus payments to payroll records

48
Q

Director’s bonuses (Confirm bonus paid post-year-end accounts statements)

A

Confirm amount of each bonus paid post year end by agreeing bank ledger accounts and bank statements

49
Q

Director’s bonuses (Review board year payments directors)

A

Review board minutes to identify additional payments to this year have been agreed by directors

50
Q

Director’s bonuses (Obtain representation completeness renumeration)

A

Obtain written representation from management confirming completeness of director’s renumeration

51
Q

Director’s bonuses (Review bonus paid directors comply legislation)

A

Review disclosures made regarding bonus paid to directors and assess whether they comply with local legislation

52
Q

Audit software (calculate ratio compare)

A

Audit team can use audit software to calculate ratio for year-to-date to compare against prior year

53
Q

Audit software (cast payables accruals completeness)

A

Cast payables and accruals listings to confirm completeness and accuracy

54
Q

Audit software (representative sample testing balances)

A

Select a representative sample of items for further testing of payables balance

55
Q

Bank balances (review FS disclosure bank balances accurate)

A

Review FSs to ensure disclosure of bank balances is complete and accurate

56
Q

Directors renumeration (obtain renumeration split salary accuracy)

A

Obtain schedule of director’s renumeration, split by salary and bonus paid and cast to ensure accuracy

57
Q

Directors renumeration (Agree sample payment payroll records)

A

Agree sample of monthly payments and bonus payment to payroll records

58
Q

Directors renumeration (Confirm bonus paid ledger account statement)

A

Confirm amount of each bonus paid by agreeing to bank ledger account and bank statement

59
Q

Directors renumeration (review minutes payments year agreed directors)

A

Review board minutes to identify whether any additional paments relating to year have been agreed by directors

60
Q

Directors renumeration (obtain written confirming renumeration bonus)

A

Obtain written representation from management confirming completeness of director’s renumeration including bonus

61
Q

Directors renumeration (review disclosures director’s compliance legislation)

A

Review disclosures made regarding director’s renumeration and assess whether these compliance with legislation

62
Q

Bank balance (agree balance reconiliation original statement bank confirmation)

A

Agree the balance per bank reconciliation to original year-end bank statement and to bank confirmation letter

63
Q

Directors bonuses Inspect (contract confirm bonus %)

A

Inspect director’s contract to confirm bonus percentage

64
Q

Directors bonuses Inspect (FS confirm profit)

A

Inspect draft FS to confirm profit before tax

65
Q

Directors bonuses Obtain (calculation bonus reperform accuracy)

A

Obtain calculation of bonus from management, reperform calculation to confirm accuracy

66
Q

Directors bonuses Inspect (bank statements amount agree ledger)

A

Inspect bank statements to confirm amount and agree to gneeral ledger

67
Q

Payroll (Agree SPL confirm arith schedule)

A

Agree expense to SPL and confirm arithmetic accuracy of the schedule

68
Q

Payroll (Agree schedule monthly payroll agency)

A

Agree make up schedule to monthly payroll and agency invoices

69
Q

Payroll (Select payroll transactions source documents)

A

Select a sample of payroll transactions and trace them to source documents (e.g. clock cards for factory memebrs)

70
Q

Payroll (Agree sample agency invoices documentation supervisor)

A

Agree a sample of items on agency invoices to documentation authorised by a supervisor

71
Q

Payroll (Trace sample clock schedule SPL completeness)

A

Trace sample of transaction from clock cards to schedule supporting expense in SPL to verify completeness

72
Q

Payroll (Compare monthly expense numbr employees)

A

Compare monthly expense for the number of employees to prior period

73
Q

Payroll fraud (discuss management TCWG aware frauds)

A

Discuss with management and those charged with governance as to whether they are aware of other payroll frauds

74
Q

Payroll fraud (review management materiality fraud)

A

Review board minutes for evidence of management discussion of materiality of payroll fraud

75
Q

Payroll fraud (review documentation confirm payments misstatement)

A

Review supporting documentation to confirm total of fraudulent payments made and assess misstatement

76
Q

Payroll fraud (compare employees payroll contracts employment HR)

A

Compare list of employees from payroll and agree contracts of employment through HR

77
Q

Payroll fraud (review bank employee one details)

A

Review employee bank account details for indications of more than one employee with same details

78
Q

Payroll fraud (test internal controls setup joiners frauds)

A

Test internal controls for setting up new joiners to assess whether further fraud has occurred

79
Q

Payroll fraud (written management disclosed auditors fraud)

A

Obtain a written representation from management that they have disclosed to auditors all knowledge of actual fraud

80
Q

Research and development (budgets project cash flow resources capitalisation)

A

Review budgets in relation to development project and cash flow forecast to assess whether adequate cash resources to complete project as at date of capitalisation

81
Q

Director’s bonuses (obtain schedule bonus cash accuracy. Disclosed FSs)

A

Obtain a schedule of directors bonus and cash schedule to ensure its accuracy. Agree amount disclosed in FSs

82
Q

Director’s bonuses (review liabilities bonus accrual year-end)

A

Review schedule of current liabilities and confirm the bonus accrual is included as year-end liability

83
Q

Director’s bonuses (agree payments post-year-end payroll)

A

Agree individual bonus payments to post-year-end payroll records

84
Q

Director’s bonuses (review board payments agreed directors)

A

Review board minutes to identify whether any additional payments relating to this year have been agreed for any directors

85
Q

Director’s bonuses (confirm amount paid bonus post-year-end ledger statements)

A

Confirm amount of each bonus paid by agreeing to post-year-end bank ledger and bank statements

86
Q

Director’s bonuses (recalculate payments documentation percentage rates contracts)

A

Recalculate the bonus payments and agree criteria to supporting documentation and percentage rates to be paid to directors’ service contracts

87
Q

Director’s bonuses (obtain written completeness renumeration)

A

Obtain written repersentation from management confirming completeness of director’s renumeration

88
Q

Director’s bonuses (review disclosures bonus directors compliance local legislation)

A

Review disclosures made regarding bonus paid to directors and assess whether these are in compliance with local legislation

89
Q

Redundancy costs (review board discontinue chemicals prior year)

A

Review board minutes for evidence of decision to discontinue the brand of chemicals prior to year end

90
Q

Redundancy costs (obtain details redundancy employee agree FSs)

A

Obtain details of redundancy calculated by employee, cast schedule and agree FSs

91
Q

Redundancy costs (recalculate provision completeness components documentations)

A

Recalculate redundancy provision to confirm completeness and agree components of cost to supporting documentation

92
Q

Redundancy costs (obtain representation management completeness costs)

A

Obtain written representation from maangement confirming completeness of costs

93
Q

Redundancy costs (review disclosures FSs IAS 37)

A

Review disclosures in FSs to verify compliance with IAS 37

94
Q

Faulty inventory (obtain breakdown inventory returned customers)

A

Obtain breakdown of goods held in inventory and returned from customers and confirm accuracy

95
Q

Faulty inventory (Agree sample returns customers breakdown existence quantities)

A

Agree on a sample basis returns from customers as per breakdown to confirm existence of returns quantities

96
Q

Faulty inventory (Damaged inventory sold post-year-end agree SI to NRV)

A

If damaged inventory rectified and sold post-year-end, agree SI to assess NRV in line with new cost of product

97
Q

Faulty inventory (Agree damaged costs documentation raw costs)

A

Agree damaged goods to supporting documentation to confirm raw material cost, labour cost and overheads attributed to cost

98
Q

Faulty inventory (Discuss management goods written valuation confirm)

A

Discuss with management if goods have been written down, if so follow inventory valuation to confirm

99
Q

Faulty inventory (Inspect minutes obtain faulty product resale)

A

Inspect monthly board meeting minutes to obtain further info regarding faulty product and possible resale value

100
Q

Payroll expense (cost payroll completeness agree expense payroll TB)

A

Cost a sample of payroll records to confirm completeness and accuracy and agree total wages expense per payroll system to TB

101
Q

Payroll expense (recalculate gross sample payroll records)

A

Recalculate gross figures for sample of employees and agree to payroll records

102
Q

Payroll expense (proof-in-total compare wages FSs differences)

A

Perform proof-in-total of wages and compare to actual wages expense in FSs and investigate differences

103
Q

Payroll expense (compare payroll figure year difference)

A

Compare total payroll figure to prior year, discuss differences with management

104
Q

Payroll expense (review payroll charges compare prior significant management)

A

Review monthly payroll charges, compare to prior year and budgets and discuss significant differences with management

105
Q

Payroll expense (calculate overtime % compare prior management)

A

Calculate overtime costs as percentage of total wages. Compare to prior year and discuss differences with management

106
Q

Payroll expense (agree wages personnel records hours clocking-in)

A

Agree sample of individual wages per payroll to personnel records and records of hours worked per clocking-in system

107
Q

Payroll expense (recalculate sample employees holiday records rate)

A

Recalculate holiday pay for sample of employees and agree holiday records and daily rate applied

108
Q

Payroll expense (agree reconciliation accounting records differences)

A

Agree payroll account reconciliation to accounting records and investigate differences

109
Q

Payroll expense (sample HR records salaries payroll records accuracy payroll records)

A

Select a sample of employees from HR records and agree salaries per HR records to payroll records to confirm accuracy of payroll expense

110
Q

Payroll expense (statutory percentage deductions % compare assess deductions)

A

Calculate statutory deductions as a % of gross pay and compare prior year to assess reasonableness of statutory deductions

111
Q

Payroll (cast records confirm completeness accuracy expense)

A

Cast a sample of payroll records to confirm completeness and accuracy of payroll expense

112
Q

Payroll (sample overtime trace records completeness overtime)

A

Select a sample of weekly overtime sheets and trace overtime payment in payroll records to confirm completeness of overtime paid

113
Q

Payroll (total net pay bank transfer listing payments ledger account)

A

Agree total net pay per payroll records to bank transfer listing of payments and to bank ledger account

AA Question Rote (29 decks)

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