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Dear sir,
I want to ask one thing that which words must be avoided in f8 paper and which is suitable like senior told me check word must not be used in f8 paper .and what is clear difference between test of control and audit procedure .?
ThanksWe recommend that ‘check’ should be avoided because it is too general and means that you are not forced to properly explain what you are doing. You can siply end up checking everything: check credit limits, check invoices, check receipts, check bad debts….etc.
Noe of that really explains what the procedure is. Better to say:
Compare account balances to credit limits to ensure no balance is over the credit limit.
Trace a selection of invoices raised during the year to the Dr of the apporpriate receivables accounts.
Trace a selection of cash receipts to the Cr of the apporpriate receivables accounts.
Inspect all journals for bad debt write-offs for authorisation by the chief accountant.
An audit procedure is anything an auditor does to collect audit evidence. Some of these procedures will relate to tests of control ie are the controls operating? Some of the procedures will be substantive porcedures, such as circularising customers to see if they agree the amounts owed.
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