RISK AND SUBSTANTIVE PROCEDURES 1Differences between auditing income statement

Risk and substantive procedures 1differences between

This preview shows page 34 - 36 out of 52 pages.

RISK AND SUBSTANTIVE PROCEDURES 1.Differences between auditing income statement and balance sheet accounts 计损益表和资产负债表账户之间的不同 : Income statement accounts reflect sum of entire reporting period transactions. 损益表 账户反应整个报告 的交易总和 Difference in nature of account is reflected in difference in testing 不同账户的性质反应不同的测试 : CR: testing controls shows them to be effective, limited substantive testing required 测试控 示它们 是有效的,有 的测试需要 Typically use analytical procedures for income statement accounts. 损益表账户通 使用的 For B/S (last week’s lecture) more confirmations, document/contract inspection etc. 的确 认,存 / 合同检查等 Put up Woolworth’s a/cs. Compare audit approach to “Revenue” in Income statement to approach to “PPE” and “Borrowings” in the B/S. 2.Extent of substantive procedures 实质性程 的程度 Extent of testing determined by risk assessment for each significant account or disclosure 实质性测试由每个重要的账户或者披露的风险评估来决定 High IR, CR: do not rely on and test controls, use significant amount of substantive testing to reduce DR 的固有风险,控制风险:不依 和测试控制,使用大量的实质性测试较少 风险 Low IR, CR: testing controls shows them to be effective, limited substantive testing required 低的固有风险,控制风险:测试控制 示它们 是有效的 3.Timing of substantive procedures 时间的实质性程 Dependent on risk assessment, can perform some types of work prior to year-end. 决于风 险评估,可以在 之前 些类 的工作 Discuss “Rollforward”, Stock takes/Bank and Drs Confirmations at May rather than June?? SUBSTANTIVE TESTING – REVENUE SALES (REVENUE) IS USUALLY A VERY SIGNIFICANT ACCOUNT 业额通 是一个 非常 重要的账户 Pressure to achieve sales targets creates risk of overstatement 达到 销售 压力 了大 的风险 High overall inherent risk 的整体固有风险 , e.g. manipulation , fraud 欺诈 Also significant because 重要 : Material size 实质性 尺寸 34
Image of page 34
High volume of transactions 大量的交易 SUBSTANTIVE TESTING – SALES TRANSACTIONS MOST IMPORTANT ASSERTIONS: 最重要的审计认定 OCCURRENCE 发生 Test recorded sales are bona fide and have occurred 测试 记录销售 得和 ACCURACY 确度 Sales are recorded at correct amount, not overstated 销售记录 正确的数量, 不是 大的 CUT-OFF 截止 Risk that sales occur after year-end are recorded early. 风险 发生后年 销售记录 Service revenue requires testing projects delivered to customers, or in progress. For example, “construction contracts”. 服务收入要 测试 传送
Image of page 35
Image of page 36

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture