Karlo Dave Paler BSA 3rd year

1. Substantive testing is an audit strategy that analyzes the financial statements and supporting
documentation to see in case they contain mistakes. These tests are required as prove to bolster
the declaration that the budgetary records of an entity are total, substantial, and precise. There
are numerous substantive tests that an evaluator can utilize.
2. Analytical procedures and test of details.
3. Analytical procedures enable the auditor to obtain corroborative evidence about a specific
account. Test of details involves examining the accrual details making up the various account
balances.
4. Examine a trend line of bad debt expenses. This amount should vary in relation to sales. If not,
management may not be correctly recognizing bad debts in a timely manner. This is a form of
trend analysis.
5. Checking the customer contracts to verify the receivable balances.
6. ST indicates a misstatement is likely to occur. Test of control provides evidence about the
existence of misstatement in an account balance.
7. Auditing evidence is the data collected for survey of a company's financial transactions, internal
control practices, and other things fundamental for the certification of financial statements by
an inspector or certified public accountant (CPA). Information obtained by the auditor in coming
up at the conclusions on which the audit opinion is based.
8. Underlying accounting data refers to accounting records that is in the financial statements
whereas corroborating information is the supporting accounting data obtained from the client’s
management and other sources.
9. Underlying accounting data example is book of accounts, related accounting manuals,
worksheet supporting cost allocations and reconciliations prepared by the client. Examples of
corroborating information are bank statements, invoices, purchase orders, and contracts which
developed by the auditor.
10. Audit working papers are records kept by the auditor that documents the audit procedures, the
information obtained during the audit process, and conclusion reached by the auditor.
11. Support auditor’s opinion on financial statements. Support auditor’s representation as to
compliance with PSA. Assist the auditor in the performance, planning, review and supervision of
the engagement.
12. Planning future audits. Providing information useful in rendering other services.
13. Providing adequate defense in case of litigation.
14. In permanent file we have the major contracts, engagement letter, and organizational chart.
Current file includes lead schedules, working trial balance, copy of financial statements.
15. Related parties refers to an entity or a person that may have dealings with other entity or a
person in which one party has the ability to exercise significant influence or control over the
party in making financial and operation decisions.
16. Entity’s parent and affiliates.
17. Auditor’s expert is and expert used by the auditor to assist him/her in obtaining sufficient
appropriate audit evidence.
Management’s expert is an expert whose field of expertise is used by the entity to assist the
entity in preparing financial statements.