8.3: Burlingham Bees

Describe how you would conduct the audit process, incorporating the analytical procedures you would use to investigate selected business transactions?

Auditors also evaluate the client’s recording of transactions by verifying the monetary amounts of transactions, a process called substantive tests of transactions. For example, the auditor might compare the unit selling price on a duplicate sales invoice with the approved price list as a test of the accuracy objective for sales transactions. Like the test of control in the preceding paragraph, this test satisfies the accuracy transaction-related audit objective for sales. For the sake of efficiency, auditors often perform tests of controls and substantive tests of transactions at the same time.

"In applying analytical procedures as risk assessment procedures, the auditor should perform analytical procedures relating to revenue with the objective of identifying unusual or unexpected relationships involving revenue accounts that might indicate a material misstatement, including material misstatement due to fraud. Also, when the auditor has performed a review of interim financial information in accordance with AU sec. 722, he or she should take into account the analytical procedures applied in that review when designing and applying analytical procedures as risk assessment procedures."

Evaluating the Reasonableness of the Accounting Estimates, and Determining Misstatements: the auditor shall evaluate, based on the audit evidence, whether the accounting estimates in the financial statements are either

A ) The objective of an audit is to safeguard agreeability with the customer's work benchmarks, assess execution and amplify benefits. Clearly, regardless of how skilful the auditor is, auditing every record is a physical outland possibility. Regardless of the possibility that 100 percent of the data could be tried, the expense of testing would likely surpass the normal advantages (the confirmation that goes with analysing 100 percent of the aggregate to be inferred. What is needed is an examining of the records. There are various techniques used by auditor for decision making during auditing. Auditors will not test all the information available to them because they are uneconomical

Identify the accounts that you would test, and select at least three (3) analytical procedures that you would use in your audit.

1a) What should the auditor consider when determining whether an account should be considered significant?

|Develop Audit programs for the substantive audit procedures for the balance sheet and income statement |35 |

The procedures to audit important “accounting estimates” include :considering the relevance, reliability, and sufficiency of the data and factors used by management, evaluating the reasonableness and consistency of the assumptions, and re-performing the calculations made by management.

One of the axioms of auditing is that the auditor 's reliance on the performance of substantive tests may properly vary with the extent of reliance on control procedures, as measured by the assessed level of control risk. Which of the following statements, if any, represents an improper interpretation of this axiom, when material financial statement dollar amounts are involved?

The second part of the analysis provides a detailed knowledge about the audit plan and what strategies could be adopted by auditor to gather sufficient appropriate audit evidence. This segment also describes various audit procedures about the valuation and measurement of foreign currency and inventory valuation. At the end, the report provides a conclusion about the overall analysis.

Analytical procedures can often point to areas that are out of sync with the prior results of the firm. Auditors should look closely at changes in the gross profit ratio and unusual changes in revenues or expenses. Once unusual results have been identified, auditors must search for reasonable explanations. If the explanations provided seem implausible then the auditor must expand the scope of testing and obtain additional corroborating evidence.

11In assessing risks of material misstatement for purchases, an auditor vouches a sample of entries in the voucher register to the supporting documents. Which assertion would this test of controls most likely support?

Auditing is the on-site authentication activity (Bernhard, 2011), Cascarino (2012) introduced the objective of auditors, which is to judge if the data is well controlled according to the accuracy and honesty, therefore to report significant error when spotted. Auditors are divided into three parties to perform within or out of a company. The first-party audit is performed within a firm, which is to measure the strengths and weakness of the company against the procedures, and external standards applied. This party of auditors are employed by the company, they are no necessary to be interested in the result of the part they are being audited. The second-party is carried externally, for instance suppliers and

- whether proper accounting records have been kept by the company and proper returns adequate for their audit have been received from brunches not visited by them