Substantive Procedures

Question 1

What are the audit procedures for obtaining audit evidence?

Answer 1

• Inspect
• Observe
• External Confirmation
• Recalculation
• Re-performance

Question 2

Why do we inspect?

Answer 2

To confirm information provided on documentation is correct.

Question 3

What are the three questions words we need in order to get full marks for substantive procedure questions?

Answer 3

How? Inspect….
What? Documentation
Why? To confirm…

Question 4

When it comes to invoices not yet received what are the audit procedures performed (substantive procedures)?

Answer 4

• Inspect the goods received note and verify the quantity and description of the goods on the goods received note.
• Inspect the supplier’s price list for the unit price of the goods and agree the amount on the reconciliation by recalculating the price per the supplier’s listing multiplied by the quantity received as per the goods received note.
• Inspect the following month’s statement to confirm that the amount is on the subsequent month’s statement.
• Inspect the invoice received, once received, and confirm the amount on the invoice is correct.