Substantive tests – Purchases / Payables

Would the below substantive tests be adequate and sufficiently detailed to obtain marks awarded for these kind of questions:

Payables:

-Obtain a payables listing and compare total to purchases control account – tests for completeness

-For a sample of payables on the payables listing reconcile to respective supplier statements – tests for completeness, valuation and existence of payables

-Compare payables days and payables turnover to prior year and industry data – tests for completeness and valuation of payables. – Would it also test for existence? [Yes]

-for a sample of invoices recorded in the ledger trace back respective grn and purchase order – test for existence [Yes]

-for a sample of purchase orders trace back respective grn and invoice – tests for completeness [Yes]

-Review trade accounts payables for any debit balances and enquire with management if these should be reclassified within receivables – classification. [Yes]

Purchases / expenses:

-for a sample of invoices recorded in the ledger trace back respective grn and purchase order – test for occurrence [Yes]

-for a sample of purchase orders trace back respective grn and invoice – tests for completeness [Yes]

-Perform analytical procedures comparing expenses as a % of sales with prior year results – tests for accuracy, occurrence and completeness [Yes]

– recalculate mathematical accuracy for a sample of invoices – tests for accuracy [What calculations? These are carried out by your supplier]

-For a sample of invoices received after year end ensure that these are included with end of year accruals – cut off [Yes]

– Perform calculation of purchase returns as a % of sales or cost of sales and compare to prior year results – cut off [Yes]

Good answers.

If I didn’t say anything, I’m happy with what you said.

in questions of substantive procedures for depreciation, disposal of non current assets and provisions for redundancy do we have to also write assertions being tested.

See in the live chat transcript here https://opentuition.com/topic/live-chat-with-the-acca-aa-tutor-26-nov – yes you should indicate relevant assertion(s) unless the requirement specifies only one.

Kindly tell if the substantive procedures below are correct or not . Plz also feel free to give a suggestion.

Purchases

Occurrence-
1) Inspect a sample of purchase transactions recorded in the purchase day book; agree the details back to purchase invoice, goods received note (GRN) and purchase order.
2) Inspect the monthly breakdown of purchase as per key product, compare to the prior year and budget and investigate any significant differences

Completeness -1) Inspect a sample of GRNs and agree to the purchase invoice through inclusion in the purchase day book.
2) Inspect the total amount of purchase, compare to the prior year and budget and investigate any significant differences.

Accuracy -1) Inspect a sample of purchase invoices and recalculate that the totals and calculation of purchase tax are correct.
2) For a sample of purchase invoices, agree the purchase price to the authorised price list.

Classification- 1) Agree for a sample of purchase invoices that they have been correctly recorded within purchase nominal account codes and included within purchases in the financial statements

Presentation- 1) Inspect a breakdown of purchase by account code and cast to ensure accuracy. Agree the breakdown of purchase disclosed in the financial statements to the purchase account codes within the nominal ledger.

Cut off -1) Inspect a sample of pre and post year?end GRNs and agree that the purchase is recorded in the correct period’s purchase day books.
2) Inspect the post year?end purchase returns and agree if they relate to pre year?end sales that the cost of sales has been correctly removed from the purchase day book.