Recap Intermediate staff - D4

What does IPE stand for?

• Information provided by the entity

• Information produced by the entity

Indirect IPE is the IPE that is used as an input to the substantive procedure we are performing.

• TRUE

• FALSE

What do we NOT understand when obtaining an understanding of the entity and its environment?

• The entity's organizational structure, ownership and governance

• The entity's business model, including the extent to which the business model integrates the use of IT

• Relevant industry, regulatory and other external factors

• The relevant measures used to assess the entity's financial performance

• We need to understand all above

Which of the following procedures below is NOT PSPs to audit Trade Payable

• Agreement of subledger with general ledger of trade payables

• Review unusual items and test debit balance of trade payables

• Perform cutoff tests for goods and services received as well as for supplier credit memos

• Perform a search for unrecorded trade payables at period-end

• Select samples of trade payable and send confirmation letters

What is included in performance of substantive analytical procedures?

• Investigation of identified fluctuations or relationships that are inconsistent with other relevant information or that differ from our expectations by an amount greater than our variance threshold

• Vouch documents of data included in a class of transactions or an account balance to identify any insufficient supporting documents for the recognition

• Determine the population of journal entries and other adjustments manually prepared during the period to identify any transactions outside the normal course of business

• Obtain from the entity the subledger and perform reconciliation of the subledger to the general ledger as of the period end date

Select all correct options

Factors to consider when determining whether a substantive analytical procedure will address a risk of material misstatement include:

• Availability of reliable and relevant data will facilitate effective procedures

• Effectiveness of the control environment

• Nature of the entity 

• Changes in management key personnels