Exam 8: Execution of the Audit Performing Substantive Procedures

The purpose of substantive procedures includes obtaining direct evidence as to

Comparing the number of days purchases in trade payables with prior years would provide persuasive evidence of accounts payable.

Which of the following factors do not influence the extent and timing of substantive procedures to be undertaken?

Using computer assisted audit techniques (CAATs) makes the audit

The audit program serves as the instructions for the audit team members to complete the required testing.

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

Comparing sales commissions or bonuses with related sales provides what level of evidence?

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."

The timing of substantive procedures is directly influenced by the level of control risk.

Inherent risk is

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

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?

Identify the steps used by the auditor when performing analytical procedures.

An example of an analytical procedure which provides persuasive evidence is

Which of the following is the first step an auditor performs when performing analytical procedures?