Est1 Task 4
5.30 (Medium) Sufficient appropriate audit evidence has not been obtained to support the conclusions. | | Procedures | General point | Quality (appropriate evidence) | Quantity (sufficient) | (a) | Observation of stock take - went according to instructionsInventory test counts and cut-off prove satisfactory. | To conclude that the ACCOUNT balance is fairly stated (i.e. in $$ terms), all material assertions must be verified. | Existence assertion (an overstatement test) has been tested from the stock sheet to the floor (one direction).Test counts should also have been selected from the factory floor and checked to the client’s inventory sheets to test for the assertion of completeness (an understatement test in the other direction). Quantities
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considers salvage value)
— reconciliation controls between calculations and general ledger.
(ii) Undertake tests of internal control to ensure that design and operation are consistent with the understanding obtained in the overview in step (i). Test design to determine effectiveness of control when operated properly. Test operation of control to confirm nature, frequency and extent. Inspect asset records and registers and discuss procedures in place for processing depreciation expense. Observe whether amounts are processed in a timely manner. Review procedures in place by management to detect errors in calculation and evaluate effectiveness. Perform a walk-through of the system and re-perform or observe controls in place.
(iii) Based on results of internal control testing, confirm or modify the preliminary assessment of control risk. If results require modification of planned approach, incorporate more extensive substantive procedures.
(iv) Conduct the following substantive tests to the extent determined necessary from the results of the internal control testing. Reconcile totals from subsidiary ledgers to general
considers salvage value)
— reconciliation controls between calculations and general ledger.
(ii) Undertake tests of internal control to ensure that design and operation are consistent with the understanding obtained in the overview in step (i). Test design to determine effectiveness of control when operated properly. Test operation of control to confirm nature, frequency and extent. Inspect asset records and registers and discuss procedures in place for processing depreciation expense. Observe whether amounts are processed in a timely manner. Review procedures in place by management to detect errors in calculation and evaluate effectiveness. Perform a walk-through of the system and re-perform or observe controls in place.
(iii) Based on results of internal control testing, confirm or modify the preliminary assessment of control risk. If results require modification of planned approach, incorporate more extensive substantive procedures.
(iv) Conduct the following substantive tests to the extent determined necessary from the results of the internal control testing. Reconcile totals from subsidiary ledgers to general