Category Archive for: Verification (Substantive Procedures)

QUESTIONS AND ANSWERS

You have found that land and buildings have been revalued during the year. What work will you perform to verify the revaluation? The specific work involve will include: Assess professional competence of the valuers. This will involve (a)considering the professional certification or licensing by, or membership in, an approved professional body and (b) experience and reputation in the…

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SHARE TRANSFER AUDIT

It is not necessary to carry out share transfer audit. It is also not a part of annual financial audit the auditor’s responsibility is to obtain evidence as to the amounts and disclosures relating to share capital in the balance sheet. As a special assignment, the auditor may be asked to carry out share transfer audit. The auditor bills…

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PROVISION FOR GRATUITY

a) Obtain or prepare a lead schedule of provision for gratuity. i) Check arithmetical accuracy ofthe schedule ii) Trace last year’s balance with last year’s working paper me. b) Study company rules and regulations relating to gratuin benefit. c) Obtain a list of employees with date of joining to ensure that on those with stipulated number of…

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STOCK SENT ON CONSIGNMENT

a) Ascertain units and cost of goods sent on consignment from the advice sent to consignee b) Inspect the advice received from the consignee for the goods on hand at year-end. c) Ensure that abnormal losses have been excluded from the cost of inventory. d) Verify the unit cost of inventory. The cost should include all expenses incurred…

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OTHER CLASS OF TRANSACTIONS AND ACCOUNT BALANCES

1. Verify relevant agreements. 2. Check compliance with Articles of Association. 3. Inspect Board and shareholders’ minutes. 4. Re compute remuneration based on profits. 5. Verify supporting documents for reimbursed expenses. 6. Check that following have been separately disclosed. The aggregate amount charged in the financial statements in respect of the directors, chief executive, managing agents…

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INVESTMENT INCOME

1. Select a sample of investment owned by the client (Completeness) 2. Calculate expected income and compare with recorded income. (Completeness) 3. Re compute income with reference to supporting documents. (Accuracy and Completeness) 4. If dividends on ordinary shares are declared from pre acquisition profits, ensure that such dividend are deducted from cost of investments. However, if it is difficult…

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SHAREHOLDERS’ EQUITY

I. Obtain or prepare a lead schedule of shareholders’ equity. (a) Trace last year’s balances with last year’s working papers. (b) Check arithmetical accuracy of the schedule. (c) Trace totals of the schedule to general ledger and balance sheet. (Existence, Obligations completeness, Valuation) 2. Test details of transactions. (a) Check that the issued capital IS within the…

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INVESTMENTS

Consider results of tests of controls over investments. 1. Obtain or prepare a lead schedule of investments (a) Trace last year’s balances with last year’s working papers. (b) Check arithmetical accuracy of the schedule. (c) Trace totals of the schedule to general ledger control account and balance sheet. (Valuation and completeness) 2. Inspect entries in• investments and…

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INVENTORIES

Consider results of tests of controls relating to inventories and cost of production. 1. Obtain or prepare a lead schedule of inventories. (a) Trace last year’s balances with last year’s working papers. (b) Check arithmetical accuracy of the schedule. (c) Trace totals of the schedule to general lodger and balance sheet. ‘ (Completeness) 2. Test details of inventory…

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TRADE RECEIVABLE

Consider results of tests of controls over sales and receivables. 1. Obtain or prepare a lead schedule of accounts receivable (a) Trace last year’s balances with last year’s working papers. (b) Check arithmetical accuracy of the schedule. (c) Trace totals of the schedule to balance sheet and accounts receivable control account. (Valuation, Completeness) 2. Based on assessed…

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