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Hello,
I’m attempting some past questions and I’ve come across one which asks:
“Explain 5 types of audit procedure given in ISA 500 Audit evidence and for each type of procedure given a n example of how that procedure can be used in the audit of trade payables”
It sounds like it should be obvious, but I’m not 100% clear on what it means by procedure, does it mean: observation, enquiry, Inspection, recalcuation and analytical procedures? Or does it mean something else?
If it does, its just that I’m struggling to think of an observation/inspection procedure for payables.
Thanks for your help.
Risk assessment procedures consist of AEIOU. These are the only ways to collect audit evidence for any purpose.
So both Audit procedures and Risk assessment procedures are the same?
When explaining each, should they be based on the same contents?
I don’t quite know what you mean. Audit procedures would always be directed towards a specific objective. So, there would be certain procedures directed at receivables that would include circularisation (confirmation), collection days (analytical procedures), cut-off tests etc. If asked for procedures relating to audit risks, most procedures would be different. Analytical procedures are still relevant, but now discussing events with management, inspecting last year’s file etc become important.
Using a term like ‘Observation’ does not explain a procedure. You have to say what you are observing and why.
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