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how to write test of controls and substantive procedures?
toc is using AEIOUCR to ensure PARIS ? subs.procedures is using AEIOUCR to ensure financial assertions?
but i dun know how to write out the procedures clearly..wat can i do?Not sure what PARIS is. Know what AEIOU is, but not CR at the end.
You can’t use Analytical procedures to test controls, only for substantive procedures.
It you are going to rely on a control you have to test it: (enquire, inspect, observe, recalculate and reperform. All you can do is to try to explain exactly what you would do. Avoid using the word ‘check’ as that does not force you to provide detail.
As for substantive procedures, you are trying to obtain evidence to support each relevant assertion, but that evidence depends on the FS item you are examining. So for assets, you need to say what you would do to collect sufficient appropriate audit evidence to support the assertions of valuation, existence, rights and obligations, etc. Try using the word ‘I’;
‘I would verify the existence of the non-current asset by physical inspection’
‘I would verify its valuation by reperforming the depreciation calculations’
‘I would verify its ownership by inspecting documents of title’ etc etc.@gromit said:
Not sure what PARIS is. Know what AEIOU is, but not CR at the end.You can’t use Analytical procedures to test controls, only for substantive procedures.
It you are going to rely on a control you have to test it: (enquire, inspect, observe, recalculate and reperform. All you can do is to try to explain exactly what you would do. Avoid using the word ‘check’ as that does not force you to provide detail.
As for substantive procedures, you are trying to obtain evidence to support each relevant assertion, but that evidence depends on the FS item you are examining. So for assets, you need to say what you would do to collect sufficient appropriate audit evidence to support the assertions of valuation, existence, rights and obligations, etc. Try using the word ‘I’;
‘I would verify the existence of the non-current asset by physical inspection’
‘I would verify its valuation by reperforming the depreciation calculations’
‘I would verify its ownership by inspecting documents of title’ etc etc.Thank you for reply ^^
physical access control,personnel competency
authorization ,approval
reporting,reviewing
information system control
segregation of duty
supervisionthis i mean paris..is it for TOC?
For the substantive procedures for sales system/purchase system,can you provide me some example of how to write it?Like you stated as above.
I understand your example stated as above.But how to write for sales/purchase system?Is it need 2 documents for write out the procedures?Eg:Trace A document to B document to ensure completeness.If use your method stated as above,how to write it out?I would verify the…….?
Sales/receivables
I would verify the existence and ownership of receivables balances by circularising 80% by value of receivables balances.
I would verify the accuracy of the sales account by tracing 100 credit entries from that account back to the sales day book.
I would trace 150 invoices listed in the sales day book back to copy invoices to verify that all sales amounts arise from invoiced amounts.
I would trace 100 copy invoices to the sales day book to verify that all sales are included in the sales day book.
etc,
etcetc
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