Explaination: Bank confirmation is the auditor’s audit procedure to test the existence, accuracy, and ownership of the bank account and bank balance of the entity. This procedure is normally performed during the interim audit rather than at the completion stage. However, if there is no interim, then it is performed at the final fieldwork the […]
What’s Bank Confirmation? And Why Do We Need It Read More »
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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Definition: Physical verification is the procedure the auditor normally performs to confirm the existence of certain physical assets that are recorded 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 physical verification
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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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Overview: Auditors generally observe the inventory count performed by the client at the end of the year or accounting period. Most of the accounting book is closing at the end of the calendar year, and normally entity performs a full inventory count to assess the actual quantity and calculate the exact amount of inventory closing
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Definition: Analytical procedures are the procedures that use by auditors to obtain 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 procedures
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Overview: Final audit testing is part of the audit test on the financial statements which is normally performed at the year-end or at the time after the client produces its financial statements. To let you get a better understanding of this, let me give you the big picture of the audit test. After this, you
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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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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
What is Audit Reasonableness Testing? (Definition, Explanation, and Example) Read More »
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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