Additional Audit Procedures

Please give an example of where you found this terminology.

The relevant part of this question is:

“You are now reaching the end of the audit work for the year ended 30 September 2005. There are two specific matters where additional audit work is required:
(i) The sales tax for the month of August was not paid to the government. This appears to have been an accidental error and the amount involved is not material to the financial statements.
(ii) The complicated method of calculating depreciation for plant and machinery appears to have resulted in depreciation being calculated incorrectly, with the result that depreciation may have been under-provided in the financial statements.

Required:
(a) Explain the additional audit procedures you should take regarding the accidental underpayment of sales tax. (7 marks)
(b) Explain the additional audit procedures you should take regarding the possible underprovision of depreciation. (7 marks)’

All this means is that in (a) and (b) the examiner wants to know the specif audit procedures you would adopt to deal with the two remaining queries on the audit. The term ‘additional audit procedures’ is not a general one; it is used very specifically here to get you to direct your attention narrowly to the matters concerned. Really it means ‘what more audit work is needed’.

Hope that helps

Additional audit work normally refers to the audit work that was not included in the original audit programmes but are needed to deal with issues that have arisen during the audit. There is no set textbook answers and you do need to use your common sense to answer the question. There are some general points that may be useflul in answering the question. For example your audit work should:
1) Clarify the issue (usually gathering more information)
2) if there is an error you need to come to an opinion about whether it is an isolated error (rare) or (more likely) an error affecting other items. Then you need to (or preferably get the client) to quantify the error. If the client does the work you need to check it.
3) Consider the effect on the financial statements and your audit report (so you need to consider materiality)

Also don’t forget your financial statement assertions – so with incorect depreciation you may discuss how you can check the ACCURACY of the calulations.

Sorry this is a bit rambling but I hope it helps a bit.