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The purpose of substantive testing is to verify the management assertions of account balances and class of transactions. Consider the following unrelated audit tests, an auditor performed for the audit of the
financial statements of a client with a fiscal year end of December 31, 2016.
For each of the three audit procedures listed below, identify the primary management assertionbeing tested, name the specific audit procedurebeing used, and state the quality of the audit evidence obtained (high, moderate, or low), explaining why the evidence is the quality level you specify.
(1 mark for the correct management assertion, 1 mark for the correct type of procedure,1 mark for identifying the quality of evidence as high, moderate or low, 1 mark for a explaining the recommended quality of evidence).(Only identify the main management assertion and the main type of procedure)
Organize your answer with these headings:
Management assertion Audit procedure Quality of audit evidence
a. (4 marks)
Vouched additions to the property, plant and equipment sub-ledger to the vendor invoice.
b. (4 marks)
Calculated the wages expense by multiplying the average weekly payroll paid to non-salaried employees times the number of employees. Discussed variance greater than 10% with management.
c. (4 marks)
Performed test counts on inventory items selected from the audit clients inventory listing.
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