Chat with AIExam 9: Execution of the Audit Performing Substantive Procedures
There are certain audit procedures that are required to be performed according to various auditing standards. Identify specific examples of such procedures and explain why the procedures are mandatory.
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Answered by Examlex AI CopilotSome specific examples of audit procedures that are required to be performed according to various auditing standards include:
1. Confirmation of account balances with third parties: Auditors are required to obtain independent confirmation of account balances from third parties such as banks, customers, and suppliers to verify the accuracy of the financial statements.
2. Physical inspection of inventory: Auditors are required to physically inspect the inventory to ensure that it exists and is properly valued in the financial statements.
3. Testing of internal controls: Auditors are required to test the effectiveness of internal controls to ensure that the financial statements are free from material misstatement due to fraud or error.
4. Analytical procedures: Auditors are required to perform analytical procedures to identify any unusual fluctuations or relationships in the financial data that may indicate potential misstatement.
These procedures are mandatory because they provide the necessary evidence to support the auditor's opinion on the fairness of the financial statements. They help to ensure the reliability and accuracy of the financial information presented to stakeholders, and provide assurance that the financial statements are free from material misstatement. Additionally, these procedures help to maintain the integrity and credibility of the auditing profession. Therefore, adherence to these procedures is essential to uphold the quality and reliability of the audit process.
The lack of significant change in an account balance from one year to the next does not necessarily mean that the auditor can assume the balance is reasonable.
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VerifiedTrue
Analytical procedures may not be useful when they are used on a company with significantly diverse operations and geographical segments.
(34) VerifiedTrue
Explain and evaluate the 'fuzzy logic' approach to assessing materiality.
(44) Identify the steps used by the auditor when performing analytical procedures.
(31) Performing substantive procedures prior to year-end, in the absence of specific effective controls, may be acceptable when:
(31) Tracing is primarily directed towards verifying which of the following assertions?
(37) Discuss the factors that influence the extent and timing of substantive procedures.
(47) Key item testing is an example of a technique used when conducting substantive procedures.
(40) Which of the following is the first step an auditor performs when performing analytical procedures?
(22) The nature of substantive procedures normally consists of one or a combination of which of the following techniques?
(41) Overall significant account conclusion statements are captured on:
(37) Analytical procedures that provide persuasive evidence include:
(42) Explain the four different levels of evidence obtained when performing substantive procedures.
(41) A significant account is one that could contain material misstatements based upon their materiality and/or relationship to identified inherent and financial report risks.
(39) Comparing sales commissions or bonuses with related sales provides what level of evidence?
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