Audit Substantive Procedures Quiz

Which of the following substantive procedures provides evidence over the EXISTENCE of non-current assets?

• Select a sample of assets included in the non-current asset register and physically verify them at the client premises

• Review the repairs and maintenance expense account to identify any items of a capital nature

• For assets disposed of, agree the sale proceeds to supporting documentation and cash book

Which of the following is a substantive audit procedure for wages and salaries?

• Inspect a sample of clock cards for evidence of authorization by a responsible official

• Recalculate a sample of payroll deductions such as employment taxes to confirm accuracy

• Attempt to access and make changes to the payroll master file using the log on for a junior clerk

Which of the following NOT should be included in an audit engagement letter?

• Objective and scope of the audit

• Results of previous audits

• Management’s responsibilities

Which of the following is NOT a responsibility of the auditor?

• To provide an opinion on the truth and fairness of the financial statements

• To conduct an audit in accordance with International Standards on Auditing

• To express an opinion on the company’s going concern status

Which TWO of the following substantive procedures provide evidence over the EXISTENCE of trade receivables?

(1) Agreeing a sample of goods despatched notes to sales invoices and to the sales ledger

(2) Undertaking a receivables circularisation

(3) Review of post year-end cash receipts, if these relate to year-end receivables follow through to the sales ledger

(4) Recalculating the allowance for uncollectible accounts

• A 1 and 3

• B 2 and 4

• C 2 and 3

• D 1 and 4

Is the following statement regarding direct confirmation of accounts receivable true or false? The verification of trade receivables by direct confirmation provides evidence that the debts are recoverable.

• True

• False

In the audit of a client where controls have been assessed as strong. Which of the following is the most appropriate approach which should be used by the auditor?

• Tests of controls only

• Substantive tests only

• A mix of tests of controls and substantive procedures

Which of the following statements is/are true regarding direct confirmation of accounts receivable?

(1) Responses from the customer must be returned directly to the client.

(2) Under the positive method the customer only replies if the amount stated is agrees with the customer's records.

• (1) only

• (2) only

• (1) and (2)

• Neither (1) nor (2)

Which of the following techniques is generally accepted to be the most efficient to obtain evidence regarding the existence of bank balances?

• Reperformance

• Confirmation

• Analytical procedures

• Observation

Which of the following audit procedures would provide the auditor with evidence of completeness of inventory?

• Tracing test counts performed at the inventory count to the detailed inventory listing

• Reviewing the physical condition of inventory when attending the inventory count

• Casting the inventory listing

• Vouching the cost of a sample of inventory items to suppliers' invoices