When the auditor conducts substantive tests each side of the journal entry is affected, i.e. double entry
Question:
When the auditor conducts substantive tests each side of the journal entry is affected, i.e. double entry accounting. For each of the following substantive tests, (and related assertion) indicate one other account, and one specific assertion relating to that account, for which evidence is also being provided.
Substantive Test and (related assertion) | Related Account Balance | Specific Assertion |
Example: Testing revenue/sales for overstatement(occurrence) | Accounts Receivables | Existence |
1. Testing accrued salaries for understatement(completeness, valuation & allocation) | | |
2. Review repairs and maintenance for correct classification(accuracy, classification) | | |
3. Ensuring that the write-down for obsolete stock under the ’lower of cost and net realisable value’ rule is adequate(accuracy, completeness) | | |
4. Testing that all purchases are recorded and are not understated(completeness, accuracy, cut-off) | | |
5. Ensuring that all bad debts that are legally bad have been written off(completeness, accuracy) | | |
Auditing and Assurance Services An Applied Approach
ISBN: 978-0073404004
1st edition
Authors: Iris Stuart