Documents used for Substantive Procedures Flashcards by Nick Duley

Receivables? (aged)

Aged receivables - slow moving balances

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Receivables? (GDN - confirm shipped)

Goods despatched notes - confirms goods have been shipped to customer

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Bank loan (lain documentation amount borrowed)

Loan documentation to confirm amount borrowed

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How to compare amounts?

Documents

Ledger accounts AND/OR bank statements

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Bank loan (con)

Bank confirmation letter to confirm outstanding balance

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Bank loan (agreement covenant details)

Loan agreement for covenant details

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Additions plant and equipment (supplier invoices valuation and rights)

Supplier invoices used for valuation and rights & obligations

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Additions plant and equipment (non-current reg existence)

Non-current asset register used to confirm existence

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Bank balances (bank rec additions arithmetic accuracy)

Bank reconciliation to check additions for arithmetical accuracy

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Compare amonuts in the bank?

Using a bank statement AND cash book/bank ledger

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Bank balances (lodg)

Lodgments - deposits/money received by a business but not received on bank statement

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Legal claim (corr)

Correspondence between third parties

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Payables (inv)

Purchase invoices received - use GRN to confirm timeframe

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Payables (Goods timeframe)

Goods received note - used to confirm correct timeframe

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Legal claims (bank statements payment made)

Post-year-end bank statements to determine whether payments been amde

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Revenue (ss individual comparison prior)

Schedule of sales - used to determine sales of individual product lines and comparison to prior years

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Revenue (inv agree master data)

Sales invoices - agreed back to a price list or customer master data information

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Revenue (Goods)

Goods despatched notes - compared to sales invoice to confirm cut-off

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Revenue (credit notes removed)

Credit notes - if found need to be removed from revenue

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Revenue (gross)

Gross profit margin

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Inventory (instr)

Count instriuctiuns - used to verify accuracy of count

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Inventory (sequentially audit tests)

Sequentially numbered inventory sheets - for testing final audit

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Inventory (goods)

GDNs and GRNs - to confirm cut-offs

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Share capital (legal documentation share)

Legal documentation and share issue

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Land and buildings (non)

Non-current asset register

Receivables (post receipts)

Post-year-end receipts - used to establish the amount of debt recovered

Provision (breakdown correct calculation)

Breakdown of restructuring provision - ensure correct calculation

Provision (ann)

Announcement - confirms when announcement was

Provision (post payments provision reasonable)

Post-year-end payments - determines whether provision is reasonable

Bank loan (schedule loans - changes)

Schedule of opening and closing loans - changes during the year

Receivables (credit allowance receivable required)

Post-year-end credit notes - determine whether allowance against receivables is required

How to agree goods in transit?

To a pre-year-end GDN

Receivables (iist sup)

List of individual suppliers - for identifying suppliers

Going concern (cash)

Cash flow forecast - does company have enough cash

Going concern (man)

Management plans - discussions for the future

Going concern (sales)

Post-year-end sales - determine if sales will increase

Inventory (WIP agree percentage count)

Breakdown WIP - agree percentage completed during count

Inventory (cost)

Cost sheets - raw material costs to purchase invoices.

Inventory (payroll)

Payroll records - agrees to labour costs

Inventory (ov)

Overheads allocated - ensure production related

Inventory (credit notes - write down)

Credit notes - determine whether write-down is required

Inventory (aged)

Aged inventory reports - determine slow moving inventory

Inventory (invoice NRV above)

Sales invoices - compare with cost to ensure NRV is above cost. Used to assess NRV

Intangible (market reports - sell product)

Market research reports - ability to sell product once complete

Sales tax liability (bank ledger cut-off)

Bank ledger account - confirms cut-off and completeness

Sales tax liability (corr tax payments due)

Correspondence with tax authority - additional payments due

Receivables (average)

Average receivables collection period - compare with prior years

What are the post documents in going concern?

Correspondence with suppliers Board minutes Management accounts

Intangible (invoice agree research development)

Invoice and supporting documentation - agree research costs and development capitalisation

Depreciation (exp budgets - last asset years)

Asset expenditure budgets - will asset last the number of years

Directors (liabilities confirm bonus)

Curernt liabilities - confirm bonus accrual

Directors (payroll confirm bonus payments)

Payroll records - confirm individual bonus payments

Receivables (confirm agreements evidence assigned security)

Confirmations and loan agreements - evidence receivables assigned as security

Redundancy provision (contracts completeness provision)

Employee contracts - confirm completeness of redundancy provision

Payables (credit notes no accrued)

Credit notes - ensure no further items accrued

Payables (suppleir statements reconcile)

Supplier statements - reconcile to supplier balances

Payables (individual supplier - goods received)

Individual supplier balances - identify goods received

Audit software (accruals - completeness)

Accruals listing - accuracy and completeness of accruals

Audit software (GRNs - cut-off)

Goods received notes - determine the cut off

Income (subscription - amounts trace bank ledger)

Subscription form - confirm amounts and trace to bank ledger and bank statement

Inventory (post sales invoice NRV)

Post-year-end sales invoices - determine if NRV is above cost

Inventory (audit - inventory issues)

Audit files - significant inventory issues arose last year

Rights issue (bank statements amount received)

Bank statements - amount received from rights issue

Supplier statements (in-transit GRN pre-year-end accruals)

Invoices in transit - ise GRM to ensure pre-year-end,therefore included in year-end accruals

Receivables (balance - documentation GDN existence)

Year-end receivables balances - supporting documentation and GDN to confirm existence

Revenue (member fee compare average reasonableness)

Membership fee - compare to average to assess reasonableness

When undertaking cut-off testing for purchases, which document should be used?

Use GRNs instead of purchase invoices

When undertaking cut-off testing for sales, which document should be used?

Use GDNs instead of sales invoices

What is reviewed for cash in transit?

Post-year-end bank ledger account

What is reviewed for goods in transit?

Pre-year-end goods despatch notes

What is used to assess whether NRV is above cost?

Post-year-end invoices

What are purchases invoices used for in inventory?

Raw materials

What are sales invoices used for in inventory?

Post-year-end sales to assess NRV

What is audit software used for?

To perform calculations and manipulate data