Page 17 - Auditinf Electronic System

2) Step 2: Substantive tests of transactions

Are audit procedures performed by Auditors to evaluate management
assertions related to client’s transactions by verifying the monetary amounts of
transactions.

Ex: verifying accuracy of a cash sale transaction by vouching the amount of
cash recorded back to sales invoice.

3) Step 3: Substantive analytical procedures.

Are analytical procedures based on analyzing and comparing fin and non -fin
data and their trend. used as evidence to provide assurance about an account balance,
through:

➢ analyzing relationships between financial and nonfinancial data.
➢ comparing financial ratios of different accounting periods
➢ comparing financial ratios to industry average and that of the

competitors.

Ex: to provide some assurance for the accuracy of sale transaction, the auditor
might examine sales transactions in the sales journal for unusually large amounts
and also compare total monthly sales with prior years. If a company is consistently
using incorrect sales prices or improperly recording sales, significant differences are
likely.

4) Step 4: Tests of details of balances

Are specific procedures intended to test for monetary misstatements in the
balances in the financial statements. Tests of details of ending balances are essential
to the conduct of the audit because much of the evidence is obtained from third-party
sources and therefore is considered to be of high quality.

Ex: related to the existence objective for accounts receivable (balance-related
audit objective), is Confirmation with the client’s customers to identify whether the
receivable exists.

18

17

‫جميع الحقوق محفوظة ـ الإعتداء على حق المؤلف بالنسخ أو الطباعة يعرض فاعله للمسائلة القانونية‬