Summary
SUBSTANTIVE PROCEDURES SUMMARY
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SUBSTANTIVE PROCEDURES SUMMARY FOR AUDIT 388
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Substantive ProceduresDebtors
General:
- Opening balance with previous year y/e balance
- Compare following balances:
o Age analysis
o Debtors ledger
o General ledger (control account)
o Financial Statements (B/S and TB)
- Obtain management “guarantee” that debtors balance is ‘reasonable’ (not
overstated).
- Inspect debtors account (GL) for any unusual entries, and enquire with management.
Detail test: Balances:
- Inspect the reconciliation between the debtor’s ledger and debtor’s control (GL)
- All significant items must be followed up on (supporting evidence, queries, etc)
- Obtain the age analysis (as per debtor’s ledger) and select sample of debtor’s
accounts.
- Forward, with client’s permission, an entirely representative Debtor’s Circularization,
taking into account the following:
o High-worth accounts
o Credit balances
o Nil balances
o Normal accounts
NB! High-risk items (>R1m, >90days outstanding, etc) must be circulated
POSITIVELY! All the other accounts can be circulated positively or negatively.
- Examine differences that arise as result of debtor’s circularization:
o Draw up order forms, invoices, etc for unacknowledged invoices.
o Draw up credit notes for unacknowledged returns.
o Any other differences through discussion with management.
- Follow up on non-responses, as follows:
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