In this chapter we showed in Figure 11.1 a purchases substantive audit programme, but we did not include the use of audit software. Suggest how audit software could have been used in programme steps 3, 4, 6, 8 and 9. In doing this, state the data on computer file which you would be able to use.

Transcribed Image Text:

FIGURE 11.1 Powerbase plc purchases audit programme Purchases audit programme for the six-month period to 30 November 2020 Financial statement assertions to be verified by this programme: 1. The purchases figure included in cost of sales is a complete and accurate record of purchases for the six months to 30 November 2020. 2. The accounts payable represent all trade creditor balances outstanding at 30 November 2020. Programme step 1: Perform an analytical review of detailed management accounts at 30 November 2020 and ascertain the purchases and trade creditor components make sense in relation to prior year and budgeted figures. Perform further analysis to discover reasons for significant variations in the figures for the period. Programme step 2: On the basis of evaluation of the purchases and accounts payable system carried out previously and of the analytical review performed in step 1, establish scope of examination. (Note: The engagement partner would be the final arbiter of scope, but the audit team would be expected to make recommendations.) Programme step 3: (designed to prove the accuracy of GRNs) (a) Check the sequence of POs to ensure that there are no breaks and check a random selection of (say) 20 in detail to GRNS, enquiring into the reason for any order that has not resulted in goods being received or amount/quality of goods received differing from the PO. (b) Check a random selection of 20 receipts in inventory records and test to GRNs. (Note: the accuracy of the inventory records has been tested by count of stock items and checking to records.) Programme step 4: (this represents a completeness test, when taken with programme step 3) Check the sequence of GRNS to ensure no breaks. If there are breaks in sequence enquire into reasons. Ref. Done by