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Hi,
Can you clarify these issues ?
Firstly, Can assertions such as completeness, accuracy, cut off, consistency can be used for both substantive and audit procedures ? Would this also apply for provisions & redundancies as well ?
Secondly, does ” obtain written representation ” require any assertion when writing an audit procedure ?
Thirdly, can we use “select a sample” in writing an audit procedure ?
Fourthly, AEIOU can be used in both audit and substantive procedure ?
Fifthly, when calculating materiality, do we need to calculate on the basis of PBT only or with revenue (if given) as well ? If PBT is more than 10%, do we say Material for it and consider it as a adjusting event or ignore it since it’s not in the range (5-10%)?
Thanks
Audit procedures consist of tests of control and substantive procedures; ‘audit procedure’ is the global term.
AEIOU can be used for substantive procedures. EIOU can be used for tests of control. (You can’t use analytical procedures for tests of control.)
Substantive procedures and tests of control are used to gather evidence about the assertoins. For example, how do you verify valuation of receivables. You need to verify every material figure in the FS and this could include provisions for redundancies.
You can say “Select a sample.”
You should say why a written representation is being required (eg to confirm all liabilities have bee included.
You should calculate materiality for both profit and revenue is both are given.
I don’t know what you mean by this sentence : If PBT is more than 10%, do we say Material for it and consider it as a adjusting event or ignore it since it’s not in the range (5-10%)?
Where has ‘adjusting event come from?
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