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Dear Gromit,
Thank you very much for your kind help
Am I to understand that picking GDNs is a part of test of control, and so I am concerned about the procedures instated of balances?
However, in testing for the completeness of income, if I am also concerned about the materiality of the transaction amount, are there any alternative procedures that I can take to test for the completeness of the sales transactions above the performance materiality?
May I look forward to receiving your kind guidance again?
Dear Gromit,
Thank you for your kind guidance.
Regarding the 12 month cash flow, would the auditors be required to check against the reasonableness of the forecast sales and purchases? If yes, what procedures are usually involved to be sufficient for the purpose.
Thank you once again for your help.
Dear Gromit,
Thank you very much for your kind guidance.
As the procedures, like reconciling suppliers’ statements, looking at payments after yaer end, etc are generally set out in the Standard Audit Programme to work through, actually what are the rsik assessment and risk response for ? Is it that where the completeness assertion of the trade payables as in the above example is assessed to be of medium risk, then we shall perform more tests (larger sampling size), while for checking the other assertion, like existence and accuracy, we can do tests of lesser extent and even no tests at all?
I would be obliged if you could give me some more guidance on this. Thanks a lot.
Dear Mike,
Thank you very much for your kind guidance.
Am I to understand that the accuracy assertion refers to transactions/ balance amounts, while the existence/ occurence and completeness assertions are related to the transcations themselves, not the amounts?
Thanks.
Thank you for your kind reply.
What I am confused about is the accuracy assertion for both the transactions and the balances in the F/S. By accuracy assertion, do we mean that the balance or transactions are neither overstated nor understated in amount? If the tests results for accuracy against, say, the balance, are not satisfactory, could we say that the balance incorrect or just inaccurately stated?
May I have your kind help again?
Deat Gromit,
Thank you very much for your reply.
But I am rather confused about the ledger names- purchase accounts, purchase day book, purchase ledger and creditors ledger. Could you gvie me some guidance on their functions? In addition, why are journals generally made in the purchase accounts, not PDB? Thanks.