[Ralphie Dos Nachos]

Hey guys,

If someone can help me out here I’d be very thankful. I’m finishing up audit ch.3 for becker and things are making more sense overall but still a bit overwhelmed as to “how things are broken down” if you will. Are footing, vouching, tracing, observation, walkthrough (becker mnemonic: C FIVE CARROT WARS) Substantive procedures or what? and also is there a difference between financial statement assertions and relevant assertions? and how do assertions fall into these procedures etc.

FAR - 76

AUD - 89

BEC - 84

REG - 86

[mmmmAccounting]

Hey – While going through audit, its important to understand the substance. Substantive testing are those done to address assertions (more on that later) – and these are normally of two types: analytical procedures (ratio, trend analysis), and test of details. You would choose the type of substantive test based on the assertion. Tests of details are more often better suited for individual transactions and analytical procedures for overall balances. For example, if youre looking to address the cut-off procedure, then it makes sense to do a test of details on subsequent invoices/delivery notes to check whether these individual transactions do in essence satisfy the assertion.
Using an analytical approach here would provide you with some assurance, but will not satisfy unless you dig down into the detail. (hope thats clear)

So, to answer your question: If you can link each of footing tracing vouching etc back to an assertion, then yes, it is a substantive procedure.

Financial statement assertions are all assertions applicable to the financial statements of the company. Relevant assertions are a subset of that which you feel are qualitatively and quantitatively material.

Think of it this way: FS assertions are the entire course offerings in your college. Relevant assertions: The courses you need to complete to get your degree.

BEC - 94

AUD - 87

FAR - 90

REG - LOL

[Mike J]

Whenever you see $ubstantive procedure, add a $ to the beginning of the word.

Control testing, think process.

AUD - 90
BEC - 79
FAR - 77
REG - 77

They don't trust JUST ANYBODY to count beans

[Author]

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