Topic 1

42問 • 1年前

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_________________ are used to detect material misstatements at the assertion level.

Substantive Procedures

They are applied when the auditor’s purpose is to see whether the peso amount (or units) of an account is properly stated.

Substantive Procedure

Substantive procedures are used to detect ___________ misstatements at the ____________ level. They are applied when the __________ purpose is to see whether the peso amount (or units) of an account is properly stated.

material, assertion, auditor's

__________________ for material classes of transactions, account balances and disclosures are always required to obtain sufficient appropriate audit evidence.

Substantive Procedure

Substantive procedures for material classes of ____________, account _____________ and _______________ are ____________ required to obtain sufficient appropriate audit evidence.

transactions, balances, disclosures, always

Types of Substantive Procedures :

Substantive Analytical Procedures, Test of Details

consist of the analysis of significant ratios and trends including the resulting investigation of fluctuations and relationships that are inconsistent with other relevant information or which deviate from predictable amounts.

Substantive Analytical Procedures

Substantive Analytical Procedure : Consist of the analysis of significant ratios and trends including the resulting investigation of fluctuations and relationships that are ____________ with other ____________ information or which deviate from ______________ amounts.

inconsistent, relevant, predictable

tests used to determine the actual details making up an account balance, classes of transactions or disclosures.

Test of Details

Types of Test of details :

Test of Transactions, Test of Balances, Test of Disclosures

These are tests of the processing of individual transactions by inspection of the documents and accounting records involved in processing.

Test of Transactions

These are tests applied directly to the details of balances in general ledger accounts.

Test of Balances

These are procedures to evaluate whether the overall presentation of the financial statements, including the related disclosures, is in accordance with the applicable financial reporting framework.

Test of Disclosures

More type of evidences are obtained by using _______________ of balances; however, this is the most costly. __________________ are the ________ costly to perform.

test of details, Analytical procedures, least

Nature of S.P. The auditor may perform (1) Substantive Anal. Proc. only, (2) Test of Details only, or (3) Both. The auditor should consider the: a. ___________ and ____________ of procedures and other audit procedures b. ______________ c. ______________ information to be obtained d. Assessment of __________ and __________ risks

Effectiveness, Efficiency, Materiality, Accuracy, Inherent, Control

Timings of S.P. The auditor may perform the procedure (1) at interim date or (2) at period end Performing at an interim date ____________ the risk that the auditor will ______ detect misstatements that may exist at ___________.When unexpected misstatements are detected at __________, the auditor may modify the nature, timing, and extend of audit procedures.

increases, not, period end, interim date

Extent of S.P. The extent of substantive procedures will depend on the results of ______________ or _________________

test of controls, risk assessment procedures

Commonly used audit procedures:

Inspection², Observation, Inquiry, Confirmation, Recalculation, Reperformance, Analytical Procedures, Trace, Vouch

_____________ of records or documents (Existence)

Inspection

______________ of tangible assets – physical examination of the assets. (Existence)

Inspection

looking at the process or procedure being performed by others

Observation

seeking information of knowledgeable persons, BOTH financial and non-financial, throughout the ENTITY or OUTSIDE the entity. It provides information NOT previously possessed by the AUDITOR. (COMPLEMENTARY to other procedures)

Inquiry

_____________ the process of obtaining representation of information or of an existing condition DIRECTLY from THIRD PARTY (Required for ACCOUNTS RECEIVABLES). (Existence, and Rights and Obligations)

Confrimation

checking the mathematical accuracy of documents or records

Recalculation

auditor’s INDEPENDENT execution of procedures or controls that were originally performed as part of the entity’s INTERNAL CONTROL

Reperformance

consists of evaluation of financial information made by a study of plausible relationships among both FINANCIAL and NON-FINANCIAL data.

Analytical Procedures

to follow a transaction through the steps of the system. (COMPLETENESS – detects UNDERSTATEMENTS)

Tracing

to prove accuracy of accounting entries by tracing to supporting documents (EXISTENCE/OCCURENCE – detects OVERSTATEMENTS)

Vouch

The process of obtaining and evaluating audit evidence through a direct communication from a third party in response to a request for information about a particular item affecting assertions made by management in the financial statements.

External Confirmation

External Confirmation The process of obtaining and evaluating audit evidence through a __________ communication from a __________in response to a request for information about a particular item affecting assertions made by _____________ in the financial statements.

direct, third party, management

External confirmation of an accounts receivables, ____________ and __________ assertions;In the case of goods held on consignment, _____________ and the _______________assertions.

existence, cut-off, existence, rights and obligations

Types of external confirmation:

Positive External Confirmation, Negative External Confirmation

Request asks the respondent to reply to the auditor in all cases either by indicating the respondent's agreement with the given information, or by asking the respondent to fill in information.

Positive External Confirmation

1. Positive external confirmation. Request asks the respondent to reply to the ___________ in all cases _________ by indicating the respondent's agreement with the given information, or by asking the respondent to fill in information.

auditor, either

Request asks the respondent to reply only in the event of disagreement with the information provided in the request.

Negative External Confirmation

Negative external confirmation. Request asks the respondent to reply only in the event of ________________ with the information provided in the request. Used when: • The assessed level of inherent and control risk is _______. • A _________ number of _________ balances is involved. • A substantial number of errors is ______ expected. • The _________ has ______ reason to believe that respondents will disregard these requests.

disagreement, low, large, small, not, auditor, no

Auditor’s Responsibility when misstatements are identified Related Standard: PSA 450, “Evaluation of Misstatements Identified during the Audit”. 1. When misstatements are identified, they must be classified into: A. B. C.

Factual Misstatement, Judgmental Misstatement, Projected Misstatement

Misstatement about which there is no doubt

Factual Misstatement

b. Judgmental Misstatement – differences arising from: ◼ Management judgement concerning accounting _____________that the auditor considers _______________ ◼ Management’s selection or application of accounting ______________ that the auditor considers _____________

estimate, unreasonable, policies, inappropriate

auditors BEST estimate of misstatements in the population

Projected Misstatement

1. Determine whether the ____________ audit strategy and audit plan need to be ____________. (depends on the materiality of the misstatement). 2. ______ misstatement accumulated must be communicated to the appropriate level of management, unless ____________ by ______ or regulation.

original, revised, all, prohibited, law

Auditor’s Responsibility when misstatements are _______________ Uncorrected misstatements are to be determined whether _____________ or not, _____________ or in ______________. In making this determination the auditor shall consider: a. The ______ and _________ of the misstatement b. The effect of the uncorrected misstatement to prior periods and to the financial statements as a ________

Uncorrected, material, individually, aggregate, size, nature, whole

Topic 1

Mikyii · 67問 · 1年前

Topic 1