Exam 9: Execution of the Audit Performing Substantive Procedures

Stella Zhang has been performing analytical procedures techniques as a substantive test. The techniques that can be used to perform analytical procedures are:

Corroborative evidence confirms audit findings from other procedures.

Jacqueline Martineau was told by her audit senior to ensure that the evidence she provided through analytical procedures was both persuasive and corroborative. Which of the following evidences are persuasive?

Substantive testing can be conducted using which of the following procedures?

Overall significant account conclusion statements are captured on:

Ying Ye believes that she will have to employ sophisticated substantive audit procedures for her client. What contributes to this decision?

Normally, it is more efficient to carry out substantive procedures than to test and rely on controls.

After performing a risk assessment of a food processing company, Sean Spino has come to the conclusion that he will require more evidence to be obtained by his audit team from substantive procedures. Which of the factors below led him to this conclusion?

Discuss the factors that influence the extent and timing of substantive procedures.

Analytical procedures that provide persuasive evidence include:

Daniel Morency has performed evaluations of financial information and determined whether the fluctuations of his client's sales figures are consistent with other data he has gathered. He has used this information to predict year-end amounts of sales. This is an example of substantive procedures called

A significant account is one that could contain material misstatements based upon their materiality and/or relationship to identified inherent and financial statement risks.

Performing substantive procedures prior to year-end, in the absence of specific effective controls, may be acceptable when:

Common examples of substantive procedures related to key items testing and representative sampling include:

Typically, substantive testing tends to be performed:

Key item testing is an example of a technique used when conducting substantive procedures.

Vouching involves tracking a source document back to the underlying accounting records.

The nature of substantive procedures normally consists of one or a combination of which of the following techniques?

Indicate whether you agree or disagree with the following statements and explain your reasoning. a. Svetlana Petrova was reviewing the risk profile of Gaz Prom Industries in order to determine detection risk. She concluded: "Both my inherent and control risks are low. I guess I should be willing to accept high detection risk." b. Boris Ivanov had performed an assessment of the accounts payable system at Magnitogirsk Iron and Steel Works Operations in the Urals. His focus was on the completeness assertion for accounts payable balances. Inherent risk and control risk were both high. He decided that because the overall risk assessment was high he would have to set his detection risk high. c. Jana Novotna, the auditor-in-charge of the Mosenergo petroleum giant, was explaining to Valentin Titov the importance of the timing of substantive procedures: "Although we associate examinations of internal controls with interim work and substantive procedures with year-end work, we can perform substantive procedures before year-end if there exists an effective control environment." d. Susan Martin, the audit senior at Canadian National Railways, was explaining to the junior auditor how vouching works: "we take a balance or a transaction from the underlying accounting records and agree it to the supporting evidence inside the company." e. Larisa McCarthy, the auditor-in-charge of the Firestone audit, feels that the large population of sales transactions warrants the use of representative sampling. She mentions to her staff: "Representative sampling using audit risk tables is especially useful when a lot of errors exist in an accounting system and the auditor perceives the risk of understatement to be high."

Vouching involves: