Assignment:

Advance Auditing

Submitted To:
Dr. Umar Qudoos Sahib

Submitted by:
Mohsin Raza
Roll No: 18
MSc 2nd
(Accounting&Finance)
Describe substantive analytical procedures that could be used to give evidence on the following
assertions:
substantive analytical procedures: -
Substantive procedures are intended to create evidence that an auditor
assembles to support the assertion that there are no material misstatements in regard to the
completeness, validity, and accuracy of the financial records of an entity. Thus, substantive procedures
are performed by an auditor to detect whether there are any material misstatements in accounting
transactions.

Completeness of accruals: -
Following steps will be used for completing the accruals: -
 To ensure the completeness of the accruals in the balance sheet, the auditor has to
reconcile detailed listings of accruals to trial balance (TB). If there is variance, further
reconciliation must be performed.
 Complete the list of accruals to those for the previous period to obtain assurance as to the
completeness of the accruals.
 Review expense categories included in the income statement to identify areas of possible
accruals and check to list of accruals for inclusion.
 Sample check computations of accruals by comparing to earlier relevant invoices and
payment records.
 Scrutinise payments made after the date of the statement of financial position to identify
accruals possibly omitted and to check accuracy of calculated accruals.
 Consider the basis for and accuracy of round sum accrual amounts.
 Check for the existence of wages accruals and compute to ensure the completeness and
accuracy of these.
Accuracy of overdraft interest expense: -
Transactions have been recorded accurately at their
appropriate amounts.
 Review the contract for interest rate.

 Calculate the interest amount to check that intertest is calculated accurately.

 Check the interest amount in the income statement.

Accuracy of wages expense: -

Following procedure are used.
 Agree the total wages and salaries expense per the payroll system to the trial balance
investigate any differences.
 Cast a sample of payroll records to confirm completeness and accuracy of the payroll expense.
 For a sample of employees, recalculate the gross and net pay and agree to the payroll records to
confirm accuracy.
 Re-perform the calculation of statutory deductions to confirm whether correct deductions for
this year have been made in the payroll.
 Compare the total payroll expense to the prior year and investigate any significant differences.
 Review monthly payroll charges, compare this to the prior year and budgets and discuss with
management any significant variances.
 Perform a proof in total of total wages and salaries, incorporating joiners and leavers and the
annual pay increase

Cut-off of sales revenue: -

Transactions have been recognized in the correct accounting periods.
 Review the invoice of any sale.

 Verify the date mentioned on the invoice.

 Check the journal entry in the income statement.

 Date or period of invoice and income statement must be matched.

 Sale tax must be deducted in the same period in which sale proceed occurred.