Audit Procedures

What’s Account Receivables Confirmation?

Overview: Auditors normally perform account receivables confirmation to confirm accounts receivables recorded in the client’s financial statements. This confirmation also seeks to confirm the accuracy and existence of the accounts balance that is outstanding at the reporting date. Normally, the account receivables report in the financial statements is considered a significant and sensitive area by …

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Physical verification of fixed assets and inventories

Definition: Physical verification is the procedure that is normally performed by the auditor to confirm the existence of certain physical assets that records in the client’s financial statements. Most of the assets that auditors verified are fixed assets and inventories. The auditor might also use this procedure to confirm the condition of those assets. The …

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Negative Confirmation: Definition, Example and How Does It Work?

Definition: Negative confirmation is an audit procedure that use to confirm the balance between the client’s records and third-party records. Third-party here could be the client’s customers, suppliers, or banks. This confirmation requires a response only if the difference between both parties’ records is found. If there is no difference found, responding to the auditor …

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Analytical Procedures: Definition, Use, and Types

Definition: Analytical procedures are the procedures that use by auditors to obtain the audit evidence so that they could assess and evaluate the financial information that presents in the financial statements based on the concept that the financial information has plausible relationships with the other’s financial and non-financial information or data. Auditors use the analytical …

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What is Audit Sampling? Definition, Types, Purpose, Objectives, 5 Methods

Definition: Audit sampling is the application of audit procedures to less than 100% of the total population and all the items in the population have the same chance to be selected. This is to ensure that the items selected represent the total population which enables auditors to draw their conclusion and express their opinion based …

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What is Audit Reasonableness Testing? (Definition, Explanation, and Example)

Definition: Audit reasonableness testing is the audit technique or procedure used to assess the reasonableness of accounting transactions, events, or balances that are recorded in the financial statements by auditors by using two or more different sources of data or information to predict accounting transactions or events. The audit reasonableness test is also one of …

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Substantive Audit Testing: Definition, Explanation, and Example

Overview: Substantive testing or substantive procedure is the technique used by the auditor to obtain the audit evidence in order to support the auditor’s opinion. Substantive testing is part of the substantive audit approach and is performed at the execution stage of the audit. It is different from to test of control. The number of …

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