Page 13 - eBook Audit Of Financial Statement Components

may obtain substantive evidence simultaneously when they

perform procedures to test the operating effectiveness of
The test of
control only controls, which are known as dual purpose tests. However, the
determines the auditor should draw conclusions cautiously because the test of
number of
misstatements control only determines the number of misstatements and not
and not the the size of misstatements. The size of misstatements is
size of
misstatements determined by the substantive tests, of which the misstatements
are significant when they are material.
The size of
misstatements
is determined The key control features and the audit procedures to be carried
by the
substantive out for a sales system are:
tests

Key Control Audit Procedures Audit Assertions
Features
1. Acceptance - Ascertain the manner orders are taken, Existence
of orders whether orally, in written or electronically
Occurrence
- Check the documentation for orders
- Check for approval of orders’ acceptance
- Ascertain follow-up actions taken for
unfulfilled orders
2. Goods - Check allocation of inventories based on Occurrence
outwards approved orders
and return - Ensure proper approvals obtained for
of goods
dispatch of goods
- Ensure proper recording of inventory
movements
- Ensure damaged inventories are properly
accounted for
- Check return of inventories to appropriate
documents
3. Pricing - Check to ensure an official price list is Rights/Obligation
used
Measurement
- Check terms and conditions for discounts
or variation in pricing for certain
customers

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