Question

For each audit procedure, select the appropriate audit objective.
	Objective		Procedure
1.			Trace receiving reports to related invoice and entry in purchases journal to determine that existing purchases are recorded.
2.			Examine sales invoices selected from the sales journal to determine if recorded on the correct dates.
3.			Verify recorded fixed asset additions by physically examining the equipment.
4.			Examine the last five sales invoices recorded in the sales journal to determine they are recorded in the proper period.
5.			Add the purchases journal for the month of July and trace to amounts recorded in the general ledger.
6.			For a sample of purchase transactions, determine whether department head has approved accounting distribution.
7.			Vouch recorded sales to sales invoice and related shipping document to support the validity of sales.
8.			Send written confirmations to customers to verify whether they have an outstanding accounts receivable balance.
9.			Add the client's listing of accounts receivable and agree to the balance per the general ledger.
10.			Examine invoices recorded in repair and maintenance account to determine if any should be capitalized.
	Transaction objectives				Balance objectives
a.	Occurrence			g.	Existence
b.	Completeness			h.	Completeness
c.	Accuracy			i.	Accuracy
d.	Classification			j.	Classification
e.	Timing			k.	Cutoff
f.	Posting and summarization			l.	Detail tie-in
				m.	Realizable value

Answer 1

Typically, there are five audit proceduresthat normally use by auditors to obtainaudit evidence. Those five audit procedures include Analytical review, inquiry, observation, inspection, and recalculation.

During the process of the preliminary assessment, an auditor is required to identify and ascertain the amount of risk involved and accordingly develop an audit plan. The audit plans should define these steps, which will be applied by the auditor to obtain.

-Substantive Audit Procedures

Substantive procedures are processes, steps, tests performed by auditors, which creates conclusive evidence regarding accuracy, completeness, existence, disclosure, rights, or valuation of assets/ liability, books of accounts.

- Analytical Audit Procedures

Analytical procedures can be defined as tests/ study/ evaluations of financial informationthrough analysis of plausible relationships among both financial and non-financial data. In simple language, certain checks/tests conducted by auditors based on study/ knowledge/ previous year figures to check and form an opinion on financial statements. Depending on the audit area, the analytical audit procedure may differ.

• Observation – Under this technique of audit, the auditor usually tries to inspect others doing/ performing a particular process. E.g., An auditor may observe steps followed in processing GRN against goods purchased.
• Confirmation – This type is applied to ensure the correctness of financial statements either from internal sources within the auditee organization or from external sources.
• Recalculation – Under this audit method, the auditor usually crosses the checks information presented by the client. Itis generally used in case of checking mathematical accuracy.
• Reperformance – Using this procedure, the auditor re-perform the entire process is performed by the client to find out gaps, audit findings, etc.