M ODULE 6 A UDIT P ROCEDURES CA. S RIPRIYA K UMAR Practical/ Article Training
L EARNING O BJECTIVES Different types of Audit Procedures Illustrations 2
SA 500 ON A UDIT P ROCEDURES Assess various types of risks the entity is exposed to Risk Assessment including tests of details and substantive analytical procedures Substantive when required by the SAs or when the auditor has chosen to do so Tests of Controls 3
A UDIT P ROCEDURES IN P ARA A14 TO A25 Audit Procedure InspectionObservationEnquiry ConfirmationRecalculation Reperformance Analytical procedures 4
D ETAILED U NDERSTANDING OF A UDIT P ROCEDURES An Intro.
O BSERVATION Observation consists of looking at a process or procedure being performed by others For example, the auditor’s observation of inventory counting by the entity’s personnel, or of the performance of control activities
I NQUIRY Inquiry consists of seeking information of knowledgeable persons, both financial and non- financial, within the entity or outside the entity. Examples include checking exchange rates applied with reference to RBI data base or checking fuel prices with applicable rates
C ONFIRMATION An external confirmation represents audit evidence obtained by the auditor as a direct written response to the auditor from a third party (the confirming party), in paper form, or by electronic or other medium. Examples include Bank / Debtors confirmation
Inspection involves examining records or documents, whether internal or external, in paper form, electronic form, or other media, or a physical examination of an asset Inspection can be of records or assets Records – example – FD receipt issued by bank Assets - Inspection of individual inventory items may accompany the observation of inventory counting I NSPECTION
R ECALCULATION Recalculation consists of checking the mathematical accuracy of documents or records. Recalculation may be performed manually or electronically. Examples include calculation of depreciation or bank interest
R E - PERFORMANCE Re-performance involves the auditor’s independent execution of procedures or controls that were originally performed as part of the entity’s internal control Examples if pass word controls exist for booking entries in a particular module, the auditor may try to access the module without a pass word/ using a generic password.
A NALYTICAL PROCEDURES Analytical procedures consist of evaluations of financial information made by a study of plausible relationships among both financial and non-financial data. Examples include key ratios that are examined
W HAT N EXT ? W HAT DO I D O ? I Know Audit Procedures!
T HANK Y OU Practical/ Article Training