ACCT2542

ACCT2542 - Lecture 5 Summary: Audit Assertions Test of...

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Lecture 5 Summary: Audit Assertions – Test of Details 1. Relationship between evidence gathering procedures Tests of controls and substantive tests of transactions and balances are two for the main evidence- gathering procedures, and the auditor selects the most efficient and effective combination of audit procedures that allows them to achieve the audit objective. The advantage of identifying assertions at risk of material misstatement is that this will direct the auditor’s evidence-gathering procedures in appropriately responding to these risks. Substantive testing of balances is where the auditor tests amounts resulting from the summation of a number of truncations. Substantive testing of transactions is to obtain reasonable assurance that the accounting records are accurate and reliable. The auditor’s approach in substantive tests of transactions is to inspect underlying documents, to trace the flow of transactions through the system and to recalculate for clerical accuracy. The assertion being tested determines the direction of tracing. Tracing from source documents to
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ACCT2542 - Lecture 5 Summary: Audit Assertions Test of...

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