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Substantive Procedures (1-Page Specific) - 1

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176 views1 page

Substantive Procedures (1-Page Specific) - 1

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abdullahumer8684
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1-Pager [Updated for Autumn 2024] Key Audit Procedures [Frequently Tested in Exams]

Insurance Receivable Impairment of PPE


 Read Insurance Policy.  Ask management to carry out impairment review.
 Inspect communication.  Obtain working. Check source data and assumptions of
 Record only if virtually certain. working.
 Physically inspect condition
Legal Case  Engage expert, if necessary.
 Read Board Minutes.
 Inspect Case File and Communication. Reconciliations [Bank, Debtors, Creditors]
 Letter to lawyer.  Cast Reconciliation.
 Effect of Subsequent events  Agree balance with GL and supporting record.
 Review adequacy of provision and/or disclosures.  For timing differences, check they are cleared in next
 Possibility/Impact of regulatory action. month.
 Management representation (on likely settlement).  For specific errors/omission, perform specific
procedures.
Warranty
 Inspect sales agreement.
 Check reasonableness of cost of warranty repair. Non-current assets held for sale
 Discuss nature of defect in inventory, and impact on  Read minutes of board meeting to check approval to sell
other areas. assets.
 Subsequent events, and their impact on recognition.  Review steps taken by management to sell the assets e.g.
 Written representation. any correspondence or agreement with prospective
buyer.
Loss by Fire/Flood  Check whether non-current assets held for sale are
 Physically inspect location. o Measured at fair value.
 Assess reasonableness of inventory/assets balance at o Presented separately in balance sheet under
location. Current Assets.
 Appropriate accounting and disclosures (e.g. o No more depreciated.
Impairment, NRV, Loss).  Obtain valuation report of expert to confirm fair value of
 Use Expert, if needed. assets.
 Check that discontinued operations are separately
Physical Verification not possible presented, and disclosed.
Perform alternative procedures i.e.
 Inspect documents (e.g. GRN, Invoices). Provision for restructuring/ staff termination
 Use technology (e.g. drone cameras, video calls)  Obtain working papers prepared by client for
restructuring provision.
Bankruptcy of a specific debtor  Obtain list of redundant employees and ensure all of them
 Inspect agreement with customer, and check for security. are included in calculation.
 Send confirmation letter to liquidator to confirm  Inquire from terminated employees regarding agreed
expected recovery. remuneration.
 Check subsequent collection, if any.  Read minutes of board meeting to identify final
 Inquire management about expected recovery. settlement with labour union etc.

Stock Count at interim date


 Physically verify at interim date.
 Prepare Reconciliation.
 Obtain record of interim sales and purchases.
 Verify record with supporting document.
 Estimate closing stock.

Stock held with third parties


 Obtain inventory report
 Visit location
 Engage component auditor. Precautions
 Send Confirmation Letter
Please note that:
Breach of Loan Agreement  Most procedures are in short-form/Key words only. But
 Read and check compliance. you have to write them in exam in Complete Sentence
 Ensure client is able to repay, or alternate arrangements. Form.
 Check subsequent status (e.g. renewal)  We have tried to give you procedures for all possible
situations, however, be prepared to face an unseen
Foreign Currency Transactions & Receivable/Payables situation in exam and to recommend procedures based
 Read contracts for in-transit Purchase/Sales Orders. on your judgment.
 Tests of Controls for correct translation of foreign  If you find any additional situation in any question, you
currency. can add its procedures in this list.
 Gain/loss on closing balances of foreign currency
recorded as income/expense.

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