Flashcards in 18 - Substantive Testing Deck (12)
Standard test examples?
Opening balances - agree to PY
Cast schedules - add up
Disclosure checklist - ensure disclosures been presented
Accounting policies - agree they’re reasonable and comply
Closing balances - TB to FS
How to design substantive procedures?
Audit programme features?
Working paper reference
PPE Common procedures?
Physically verify (s>f/f>s) - EXISTENCE/COMPLETENESS
Agree additions and disposals
Repairs and maintenance review (any expenses in error) COMPLETENESS/CLASSIFICATION
Impairment review (physical condition) - V
Depreciation reasonableness test (expectation of dep expense) - V
Recalc depreciation - V (CAAT)
Common tests for trade receivables?
Subsequent cash testing - Tracing cash received after YE
Debtors circularisation - CAAT to select sample
Testing provision - CAAT calc receivables days to identify potentially irrecoverable
Four key tests to determine whether there is sufficient appropriate evidence that a balance is recoverable?
Aged debtors report - query 60/90 days, round sim payments, early invoice unpaid but later ones cleared, customer paying less than invoiced
Reasonableness of policy relating to the allowance for receivables - how to calc allowance
Post year end credit notes - provisions not been made at YE
Post year end cash receipts - if not able to check review irrecoverable debt history too, credit checks
Trade payables key risk
Common tests for trade payables?
CAAT to sample and review supplier statement reconciliations - mix of types
Analytical review graphs
Search for unrecorded liabilities
Goods received not invoices
Once invoice received
Cr trade payables
Common tests for inventory?
Follow up test at inventory count
Cut off testing
Cost vs NRV testing
Testing inventory provision
Common tests for intangible assets?
Costs capitalised to invoices
Review cash book for invoices not capitalised
Review research expense account that may relate to development so should be capitalised
Recalc amortisation charge
Review sales post YE to determine impairment
Compare actual costs to budgeted to endure costs not overcapitalised