characteristics or randomly sampled or a combination of both. Examples of the particular characteristics are size (materiality consideration) and unusualness (risk consideration). This approach is time-consuming. Therefore, it is a good idea to reduce the sampling size by considering whether analytical procedures or tests of controls can be performed to obtain assurance in relation to the items not tested. Tests of details of balances Detailed tests of balances (also called substantive tests of balances) focus on the ending balances of each general ledger account. The extent of tests depends on the results of tests of control, analytical procedures and detailed tests of transactions relating to each account. Like detailed tests of transactions, the sample size can be varied and remains a matter of professional judgement. Techniques to be applied for this kind of tests include account reconciliation, third party confirmation, observation of the items comprising an account balance and agreement of account details to supporting documents. Timing of Audit Procedures
95 Timing refers to when audit procedures are performed or the period or date to which the audit evidence applies. The auditor may perform tests at an interim date or at period end . For practical purposes it is generally necessary that an auditor performs audit procedures at a time other than year-end and calculate the year-end results by analytical procedures. Evidence gathered at the period end is more accurate and complete than interim evidence. Therefore, the higher the risk of material misstatement, the more likely the auditor is to perform substantive procedures nearer to, or at, the period end rather than at an earlier date. Audit procedures performed unannounced or at unpredictable times may also mitigate misstatement risk. Performing audit procedures before the period end may assist the auditor in identifying significant matters at an early stage of the audit, and consequently resolving them with the assistance of management or developing an effective audit approach to address such matters. In addition, certain audit procedures can be performed only at or after the period end, for example: - Agreeing the financial statements to the accounting records; - Examining adjustments made during the course of preparing the financial statements; and - Procedures to respond to a risk that, at the period end, the entity may have entered into improper sales contracts, or transactions may not have been finalized. Further relevant factors that influence the auditor‘s consideration of when to perform audit procedures include the following: - The control environment. - When relevant information is available (for example, electronic files may subsequently be overwritten, or procedures to be observed may occur only at certain times).
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