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    Lecture Slides - Audit Assertions Testing

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    Lecture Slides - Audit Assertions Testing

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    12 views14 pages

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    Download as pptx, pdf, or txt
    12 views14 pages

    Lecture Slides - Audit Assertions Testing

    Uploaded by

    chunyin0605

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    You are on page 1of 14

    MG3600 Audit & Assurance

    Audit of assertions

    Brunel Business School


    MAJOR PHASES OF A STATUTORY
    AUDIT

    Audit
    Engagement

    Audit Audit
    Report Planning

    Audit Tests of
    Completion control

    Substantive
    Procedure
    s
    LEARNING OBJECTIVES

    Risk of material error or misstatement going undetected

    Audit assertions

    Sources of audit evidence

    Compliance testing, Substantive testing, Analytical procedures

    Evidence and opinions provided by specialists

    3
    AUDIT RISK
    AR = IR X CR X DR
    FINANCIAL STATEMENT ASSERTIONS
    CATEGORIES OF ASSERTIONS

    ISA 315
    CONFIRMING ASSERTIONS

    What evidence to find for which assertion?

    What quality and quantity of evidence?

    Is evidence collected sufficient?

    Is evidence collected relevant to assertion?

    What are time and cost limitations?

    Judgement instead of absolute proof


    AUDIT TESTING

    Substantive
    testing
    Compliance
    testing Substantiv
    also referred to as e
    Test of procedures
    Controls
    Analytical
    procedures
    TESTS OF CONTROLS

    • The auditor will look for evidence that control


    procedures are operating satisfactorily and can be
    relied upon
    • This is also known as compliance testing
    • These are tests of control procedures rather than
    detailed tests of individual transactions or balances
    SUBSTANTIVE TESTS
    Detailed tests of individual transactions and balances

    To provide evidence to support the relevant assertions


    made in the financial statements
    SUBSTANTIVE TESTS
    EXAMPLE

    The financial statements of Motel Chocolate contain a


    balance of £1m for the land and buildings from which the
    company operates.
    1. The auditor can test this balance by obtaining a
    property valuation report from an expert to confirm
    that the balance of £1m is valued appropriately.
    2. the auditor will also inspect the title deeds to the
    property for the name of the client to confirm that
    Andes Co has the right to include the asset in their
    financial statements.
    DIRECTIONAL TESTING
    Moving
    debt off
    balance
    Not sheet
    providing
    Overstatement for
    doubtful Recording
    debts sales which
    happened
    after cut off
    Not
    showing
    sales in the Showing
    Understatement correct year Third party
    inventory
    as assets*
    ANALYTICAL REVIEW

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