Audit Procedures

Hello, hope you’re doing good.

Yes, this is an extremely important topic and it’s very normal to get a bit scared of it. If you go through GTG, Kaplan or BPP you’d find a list of audit procedures confirming assertions. They’d be possible/standard procedures for simple purchase/sale/inventory etc. systems. In exam you’ll come across a complicated scenario in which obviously you’ll need to use your common sense but you’d only be able to use your common sense if you already know and understand the steps of purchase/sales/ inventory etc. systems. You should be knowing the internal control system etc. too. So, in order to solve a question on audit procedure we need to have a grip over certain topics.

In order to solve such questions, I’d advice you to first relax yourself. Tell yourself, I know how a particular system works, I know what would happen if any of the steps are missing or to check and confirm if the whole procedure was carried out efficiently.

If you’re doing a question on purchase system, be sure that you know how it works in manual and computerised environment. You should be knowing how a purchase requisition is placed till the last step of recording the entry in the books.

You asked, ” How will i know i have to trace orders to goods received notes to check completeness of recording of liabilities”.

How will you know? This is some thing you would know once you’ve sloved plenty of questions on audit procedures.
You need to see whether you’ve actually placed an order for the goods you are receiving? Match the purchase order with supplier’s invoice, check to see if you’ve received an invoice yet for the goods received etc to verify the completeness assertion in every sense.

I hope I’ve helped you a bit, if you still need to know anything, you’re most welcome 🙂

God bless.