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FMGT 4310 - Chapter 8_ _Execution of the Audit -- Performing Substantive Procedures
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FMGT 4310 - Chapter 8_ _Execution of the Audit -- Performing Substantive Procedures
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FMGT 4310 - Chapter 8: "Execution of the Audit --Performing Substantive Procedures"
Comprehensive Review
Substantive audit procedures are procedures designed to obtain direct evidence of the: -
ANS-completeness, accuracy, and validity of data, and
the reasonableness of the estimates and other information contained in the financial statements.
How is DR reduced or increased? - ANS-DR is reduced or increased in direct proportion to the
amount of substantive testing performed.
What are the 4 main factors that influence how much substantive testing must be performed? -
ANS-* nature of the test,
* the level of assurance necessary,
* the type of evidence required, and
* the complexity of the client's data-capturing systems.
The timing of substantive procedures is most flexible when controls have been tested and
assessed as effective. In that case: - ANS-the procedures can be performed up to six months
before year end.
When controls are not tested or are not assessed as effective, the timing of substantive
procedures... - ANS-... is at or near year end.
What are 2 different types of substantive audit procedures? - ANS-* Tests of details
* Substantive analytical procedures
What are the 4 different levels of audit evidence obtained when performing substantive
procedures? - ANS-* persuasive,
* corroborative,
* minimal, and
* general audit evidence.
What are the 4 steps to design an audit plan to audit accounting estimates? - ANS-1) After an
auditor identifies and assesses the risk of misstatement relating to accounting estimates, the
auditor plans the audit response.
2) Procedures may include obtaining evidence after year end but before the audit report date,
developing an estimate to compare with management's, and testing the estimate of
management.
3) Additional work is required if a risk is assessed as a significant risk.
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