General procedures
- Obtain a schedule and recalculate
- Compare the o/b to the prior years audit f/sand work paper c/b
- Agree closing balance
Schedule = ledgers
Financial statement = trial balance
Trial balance= general ledger - Inspect general ledger for unusual entries. Inquire and investigate
- Request a management representation letter for…for which assertions
- Inspect the disclosure is correct
Analytical procedures
steps
1) Decide which calculations/ratios to use
2) Develop an expectation
3) Decide on an acceptable deviation
4) obtain Data
- Evaluate → Origin of Data → Type of Info
- comparability of Info
- Availability of info
- Internal Controls around Info
5) Execute procedures
6) Compare results to expectations
7) Investigate significant differences
- Investigate reason
- obtain sufficient evidence that corroborate the reason
Debtor’s confirmation
Obtain client permission
Select sample- mix of high and low value items- positive(preferred) or negative confirmation
Follow up on differences and no answers
Techniques
substantive procedures:
-Inspect- what for what?
- Recalculate
- Confirmation-
- Reperform- what?
- Enquire -from who, about what?
Developing substantive procedures
1) What account is being asked
Is it a transaction or alone - T account
2) which document and journals are applicable
3) which are assertion and audit objectives are applicable
ISA 315
4) Inspect, re perform, confirmation, re calculation and inquire
5) which procedures must be formulate-
Analytical procedures
General procedures
Test of detail of balance/transaction
Developing estimates
Identify
• Identify- estimate in the question
• IFRS- which specific IFRS standard is applicable
- Audit the IRS requirements
• Process- Enquire from management about the process reasonable & in accordance with IFRS
• Competence- Evaluate the competence, objectivity and experience of preparer
• Assumptions- Evaluate whether the reasonability of any assumptions
- Audit the evidence (inspection/reperformance/confirmation)
- Do they correspond and agree with other areas in the business
• Past estimates- Enquire about the reliability of assumptions in other department/previous year (inspect if possible)
• Evaluate reasonableness- Evaluate reasonableness of estimate from knowledge of the business
• Own estimate- Perform own estimate or use expert
- Detail procedures expert (Topic 6- Competence, Capabilities &Objectivity; Understand the work, Evaluate the work)
• Approval- Inspect minutes of meetings
- Decision
- Approval
• Subsequent events- If possible, obtain audit evidence
