We are presently moving on to have an effect on the substantive testing or verification side of the audit. the primary steps inside the time structure of Associate in Nursing audit:
• Acceptive the appointment
• Planning, recording, dominant the audit
• Analysis of internal controls
• Testing the controls
By this stage, the auditor will have created an alternative on the ultimate approach to be taken to the audit work. If the management systems area unit effective and operating as ordered down, the quantity of verification work goes to be reduced. If the controls area unit weak or are not operating effectively, a high level of verification work goes to be performed. it’s this verification work that we’ve got an inclination to addressing throughout this. To verify suggests that to establish the fact of 1 factor. This audit work involves the audit in gathering proof this may lead to a conclusion on whether or not or not classes of transactions, balances, and disclosures reflected inside the client’s cash statements area unit properly express (true and fair).
Audit Verification Techniques:
the auditor is usually conferred with a group of draft cash statements prepared by the patron.
The role of the auditor is to get proof to allow a conclusion to be reached on whether or not or not the info contained in these cash statements, and additionally the tactic the info is conferred and disclosed, provides a real and truthful read.
We already acknowledge that audit proof is generated by the auditor activity audit tests. Here, in verification work, the auditor will use substantive testing procedures, designed to supply proof regarding the figures within the cash statements, rather than management check, addressing the systems that created those figures. However, the testing procedures gettable to the auditor here are like those we’ve got an inclination to saw earlier. As a reminder, audit-verification procedures gettable to the auditor are:
1.Inspection
This covers the inspection of records, documents, and tangible assets. Associate in Nursing example in substantive testing is examining purchase invoices to substantiate that they have to be properly recorded and analyzed inside the money statements.
2.Observation
This procedure is very applicable to tests of management, however, it may additionally be utilized in substantive testing, like the auditor observant the client’s inventory count to understand the proof that the inventory figure inside the money statements had been noninheritable accurately.
3.Inquiry
One must consult from knowledgeable persons inside or outside the enterprise.
An example in substantive testing is asking management for proof on why a due has or has
not, been treated as dangerous.
4.Computation
Checking the arithmetic accuracy of records or activity freelance calculations, as an example, computing
or re-computing the depreciation expense for the year.
5.Analytical procedures
You should note that these procedures area unit primarily utilized in substantive checking rather than as a take a look at of controls. they’ll facilitate the auditor to grasp the relationships between figures inside the money statements. this is often generally mentioned thanks to the business approach to auditing
