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See the reason for deposit.
Then how Deposit was created and check relevant agreement/support that the deposit is long-term or short term... Be Alert for Related Party Transaction.
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The impact of internal audit on organization?
Internal audit reveals to management whether internal control procedures are duly followed or not.
What is the purpose of an internal audit?
Main purpose of internal audit is to establish internal control system as well as procedures which ensures that all departments works as per policies and procedures established by management of business as well as to help external auditors in conducting external audit.
What is asserted in an operational audit?
In an operational audit, the management of an organization asserts that the operations of the organization are being conducted in accordance with management's established policies and procedures.
An auditor traced a sample of purchase orders and the related receiving reports to the purchases journal and the cash dispursements journal The purpose of this substantive audit procedure most likely?
Determine that purchases were properly recorded.
Maxall company audit solution?
Meaning of Substantive Audit and the approach applied in EM's Audit of Maxall.What do you think the auditors meant by the term "Substantive Audit"? Was the substantive approach appropriately applied in EM's audit of Maxall?Here the term substantive Audit refers to the test of account balances with respect to the transactions relating to it.Yes the substantive approach was appropriately applied in this audit which was confined to Accounts Receivables, in relation to sales.Comparison of Audit Procedures that are in accordance with Generally Accepted Auditing Standards.Identify and discuss specific audit process/procedures that the auditor(s) performed that were in accordance with Generally Accepted Auditing Standards.We have got three types of tests performed under substantive audits, as per the Generally Accepted Auditing Standards, namely(I) Test of Transactions,(II) Test of balances(III) Analytical review procedures.(I) Test of transaction: It is an auditing procedure related to examining specified transactions and supporting documentation. It is part of the testing process used by the auditor to check internal-controls reliability. It is undertaken to gather evidence so that an audit opinion can be rendered as to the fairness of financial statement presentation. Included in such a test is verifying transaction amounts and tracing transactions to accounts in the financial statements.Here this test was confined to Accounts receivable, sales and inventory.(II) Test of Balances When EM compares the book balance of cash to the book balance, it is a test of balances. This is the step in which the Auditor seeks to obtain sufficient evidence to make a final judgment on the extent of losses or account misstatements that have occurred or might occur.Here, in this audit, the CPA's obtained evidence relating to the Accounts receivables with respect to the sales made during the year. They found out that 6 invoices made at the year end and confirmed those with the concerned customers.(III) Analytical review is an auditing process that tests relationships among accounts and identifies material changes. It involves analyzing significant ratios and trends for unusual changes and questionable items. Included in the analytical review process are: (1) reading important documents and analyzing their accounting and financial effects; (2) reviewing the activity in an account between interim and year-end, especially noting entries out of the ordinary; and (3) comparing current period account balances to prior periods as well as to budgeted amounts, noting reasonableness of account balances by evaluating logical relationships among them (i.e., relating payables to expenses, accounts receivable to sales).Only a part of Analytical review was made by EM for this company. They made certain adjustments relating to sales and Provision for doubtful debts.Identification of Audit Errors made by EM and Precautionary measures to be taken.Identify the specific audit errors made by EM and discuss what the auditorshould have done to avoid the errors.Inherent risk is the susceptibility of EM audit area to error which could be material, individually or in combination with other errors, as there were no related internal controls. Here we can see a possible error relating to Material. The material level was fixed at $35000 for 20x1 and $50000 for 20x2 which was not substantiated. There is no proper evidence to set these levels for the Material. As per the CPA standards the Material Level should beUnder single Rule5% of pre-tax income0.5% of total assets1% of equity0.5% of total revenuesOrUnder Variable rule2 to 5% of gross profit, if less than $20,0001 to 2% of gross profit, if between $20,000 and $1 million0.5 to 1% of gross profit, if between $1 and $100 million0.5% of gross profit, if more than $100 million.These rules have not been followed here.Comparison of audit in compliance with latest professional guidance.The scope of a forensic audit is to fix blame or answer a question. A forensic audit seeks proof, not reasonable assurance. Here the auditors have conducted a normal audit. When they found out the sales made in late December 20x1 and 20x2 to Balco limited, was given 90 to 120 days credit limit, they should have enquired into the reasons behind it and should have gathered enough evidence for evaluating the credibility of the customer. But they accepted the Mary Maxwell assurance for this customer. This evidence clearly shows that this audit was not conducted entirely in compliance with the professional guidance regarding the forensic-type phase of audit.
Why do Auditors use Substantive Procedures?
Substantive procedures performed by the auditor during the substantive testing stage of the audit that gather evidence as to the completeness, validity and/or accuracy of account balances and underlying classes of transactions.
What substantive procedure would you perform in the audit of revenue?
Mostly Analytical procedures are performed when verifying Sales / Revenue
When to use substantive test and test of controls during audit of entity?
When there is material misstatement
What is the Difference between HR audit And Financial Audit?
Under HR Audit, audit of HR procedures and process is done while in financial audit, audit of finance related matters are done.
What procedures need to be done after a safety audit is complete?
No
How do you audit share based payments and special purposes entities?
examples of audit procedures for share based options
The impact of internal audit on organization?
Internal audit reveals to management whether internal control procedures are duly followed or not.
Audit procedure for letter of credit?
The audit procedure for letter of credit ensures the compliance of sanctions and post sanction procedures.
What is a surveillance audit?
A survelliance audit is a process where current procedures are checked and verified against the company's quality management system.
What is audit procedures?
Audit procedure is the process followed while auditing an entity which may include:Confirm the audit assignmentComplete appropriate planningExecute actual internal audit workDevelop a report
What is audit client screening and what are audit client screening procedures?
During an audit, a client may be screened before the actual audit to inform them of what will take place. This is a time to give them information on what to bring and answer questions.
What is the purpose of an internal audit?
Main purpose of internal audit is to establish internal control system as well as procedures which ensures that all departments works as per policies and procedures established by management of business as well as to help external auditors in conducting external audit.
