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Hi,i just have few questions that are not clear to me after reading the book.Firstly I still don’t understand what exactly substantive procedures are.Are they analytical reviews?Maybe it would help some example of substantive procedure.
Also who is engagement partner?Auditor or client?
My last question is what exactly does it mean if error is pervasive?
Thank youA substantive procedure is the test that an auditor will perform to test the assertions they want to test. Analytical procedures is a type if procedure and this is looking and comparing data to look for any huge differences in data that might highlight a potential misstatement on the FS.
With ST think balances in the FS and what you would do to see if they are free from materially misstatement.
Engaging partner is the auditor is the overall boss. He does not perform any tests etc. he signs the report and judges the overall decision on the work the audit team work.
An error is pervasive if it affects a lot of balances in the FS. This is with regard the audit report and will normally result in a disclose opinion if there is lack of audit evidence or an adverse opinion if there is a lot of materiality that effects a lot of balances.
Hope this answer your
Best of luck everyone on Thursday 🙂
F8 EXAM FOCUSED
1. Identify and explain Wages system weaknesses and recommendations to control them.
2. Going Concern and procedures on forecasted cash flow.
3. Identify and explain Audit Risk and response of Auditor.
4. Substantive procedures on receivables and revenue OR payables and purchase.
5. Internal v/s External Audit, advantages and disadvantages of outsourcing Internal Audit.
6. Explanation of Sampling methods.
7. Auditor responsibility for Fraud.
8. Importance of understanding the Entity/ Audit Plan.
9. Status of ISA.
10. Difference of Positive and Negative Assurance.
11. Elements of Control System.
12. Benefits of Audit Committee.
13. Elements of Engagement Letter.
14. Audit procedures for Accounting Estimates.
15. Interim v/s Final Audit.
16. Contents and benefits of Audit documents.
17. Confidentiality and its Exceptions.F8 (INT) EXAM FOCUSED
1. Identify and explain Wages system weaknesses and recommendations to control them.
2. Going Concern and procedures on forecasted cash flow.
3. Identify and explain Audit Risk and response of Auditor.
4. Substantive procedures on receivables and revenue OR payables and purchase.
5. Internal v/s External Audit, advantages and disadvantages of outsourcing Internal Audit.
6. Explanation of Sampling methods.
7. Auditor responsibility for Fraud.
8. Importance of understanding the Entity/ Audit Plan.
9. Status of ISA.
10. Difference of Positive and Negative Assurance.
11. Elements of Control System.
12. Benefits of Audit Committee.
13. Elements of Engagement Letter.
14. Audit procedures for Accounting Estimates.
15. Interim v/s Final Audit.
16. Contents and benefits of Audit documents.
17. Confidentiality and its Exceptions.Seanog91-My answer on substantive testing. It is a test that is undertaken on balance sheet values to attest a true and fair opinion. The opposite is test of controls or compliance testing. This checks if the accounting system works as designed.
In substantive testing, we use monetary unit sampling whilst in test of controls we use random sampling.
For engagement partner-I have no idea!
Here are examples,
Substantive procedures dealing with testing transactions can include the following:
1. Examining documentation indicating that a procedure was performed
2. Making inquiries or actually observing a transactionExamples of such substantive procedures are:
Bank confirmation
Observe a physical inventory count
Examine accounts payable supporting documents
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