Analytical Procedures

Monday, January 12, 2026

11:50 PM

 Co relations

o Rev and COS

o REV and Profit

o Assets and Dep

o Loan

o Sales

o Purchases and Pay

 Format

o Data

o % inc/dec

o Materiality level

o Over/under stated

o Acc treatment ROMM

 Threshold of Materiality

o PROFIT > 5%

o ASSETS > 1.1%

o REV > 0.5%

Audit and BS Risk

Tuesday, January 13, 2026

3:11 PM

 Business risks don’t always lead to audit risks, but

every AR has a BR behind it.
  AKA every child has a parent, but not every adult
"parent" has a child.

BR AR

Legal Provision
Case

Obsolete Cost vs NRV

valuation

BD Exp BD and
reduce T rec

AUDIT LANGUAGE!!!

Tuesday, January 13, 2026

3:24 PM

IR

1. Susceptibility

2. Assertion

3. Class of TAD (Transactions, acc balance & disclosures)

4. To misstatement

5. That could be material

6. Before considering any related controls

So All Crows Mean Murder Combined

Susceptibility of Assertion to a class of trans, acc balances or

disclosures to misstatement that could be material before
considering any related controls.
Susceptibility of assertion about a class of transactions, acc
balances or disclosures to misstatement, that could be material
before considering any related consideration

susceptibility of an assertion of a class of transactions, acc

balances or disclosures to misstatement that could be material
before consideration of any related controls

Susceptibility of an assertion about a class of trans, account

balances or disclosures to misstatement that could be material
before consideration of any relted controls.

CR

1. Misstatement

2. Could occur

3. Could be material

4. Will not be PDC (prevented, detected and corrected)

5. On timely basis

6. By entitys control

MOMNTC

DR

1. Procedures performed

2. My auditor

3. To reduce AR

4. To acceptably low level

5. Will not detect

6. Misstatement that exists

7. Could be material
PAAADMM

Professional Skepticism

1. Attitude

2. Includes a Questioning mind

3. Being alert to conditions

4. May indicate possible Misstatement

5. Due to error or fraud

6. And a critical assessment

7. Of auditor evidence

AQAMDCE

Attitude incl QM being alert to Conditions that may indicate

possible misstatement that could be due to error or fraud and
critical assessment of auditor evidence.

Materiality Level

1. Misstatement

2. Incl omissions

3. Considered 'Material

4. IF individually or aggregate

5. Reasonable expected

6. To influence Econ decisions

7. Users

8. taken On the basis of st

THRESHOLDS??

REVENUE 0.5% -
1%
PBT 5% -
10%

ASSETS 1% -
TOTAL 2%

Internal Controls

Thursday, January 15, 2026

3:36 PM

Test of Controls

 Key Control

o FORMAT

o Link with Control Objective (it will ensure)

o HOW? (how IS IT key control)

o BS risk prevented

 Control Deficiency

Sales Invoicing Stages

Stage Objective

Order  Only customers which

pay promptly.

 All orders processed.

 Only those orders

accepted for which
INV is av.
 Dispatc 
h

Invoice  All orders are invoiced

 Invoiced accurately

Recordi  All are recorded

ng

Rec
Cash

Test Of Control

1. Single Doc

Invoices are sequentially numbered, On a sample basis

review/inspect invoices to confirm that they are numbered
sequentially.

Invoices are authorized by director, on a sample basis review

invoices to confirm that there is the directors signature

2. Input/Output

On a sample basis, select new customers and tally credit limit on

credit application with the sales system, to confirm that the
credit limit of both are consistent with each other.

3. No Doc

Observe that there is a segregation of duties in accounts dept

4. CAAT: Computer assisted audit techniques

Enter a fake sales order with fake/wrong customer code/acc

number, to confirm that the system will reject as it should.
Purchase System

Orders Placed  All purchases are made w/

suppliers cleared for quality,
reliability and pricing

 Purchases are only made for a

valid bs use

 Orders are placed with

consideration of lead times to
avoid disruption to business

Goods  Only Goods ordered by the Co are

received accepted

 Goods received are recorded

promptly

Invoice  Invoices received relate to goods

received actually received

 Invoices received relate to Co

 Invoices received are correct in

terms of QTY, Prices, disc

Transaction  All purchases and related

recorded in payables are recorded
Books
 Purchases are recorded
accurately and related payables
are recorded at an appropriate
value

 Purchases are recorded in the

period to which they relate

 Purchases and payables are

recorded in the correct amounts

Cash Payments  Payments are only made for rec

goods

 Only made once

  Made on time

Final REVISIONS FOR RISK/KEY CONTROL/ DEF/ TOC

Wednesday, January 21, 2026

3:08 PM

Question Objectives Format

related

Risk 1. Data

2. ACC
Treatment

3. Risk of
incorrect
treatment

4. IR/CR/DR

5. Effect on F s

Control 1. DATA

2. CO

3. HOW

4. BS RISK

5. BR Avoided

Deficiencies 1. DATA

2. Control OBJ

3. HOW

4. BR/AR

Test Of 1. 1 DOC
Controls
2. 2 DOC
(Input/Output
)
 3. CAAT

4. Observe

Analytical 1. Data
Procedures
2. % inc/dec

3. Materiality
level

4. Over/under
stated

5. Acc
treatment
ROMM

SYSTEMS AND OBJECTIVES

Thursday, January 22, 2026

1:38 AM

SALES

Ordering

o Goods are only supplied to customers who pay promptly and

in full.

o All orders are processed.

Dispatch

o Orders are dispatched promptly and in full to the correct

customer.

o All orders are dispatched

Invoicing

o All goods dispatched are invoiced.

o Invoices are raised accurately.

Recording

o Only valid sales are recorded

o All sales and related accounts are recorded and in correct

amounts

o Revenue is recorded in the period to which it relates

o Sales are recorded accurately and related receivables are

recorded at an appropriate value

Cash Received

o Cas received is allocated against correct customer and

invoices to avoid disputes

o Overdue debts are followed up on a timely basis

o Irrecoverable debts are identified and written off

appropriately

PURCHASE SYSTEMS

Ordering

o All purchases are made with suppliers who have been

checked for quality, reliability and pricing.

o Purchases are only made for a valid business use.

o Orders are placed taking consideration of delivery lead

times to avoid disruption to the business.

Goods Received

o Only goods ordered by the company are accepted.

o Goods received are recorded promptly

Invoice received

o Invoices received relate to goods actually received.

o Invoices received relate to the company.

 o Invoices received are correct in terms of quantities, prices,
discounts.

Recording

o All purchases and related payables are recorded.

o Purchases are recorded accurately and related payables are

recorded at an appropriate value.

o Purchases are recorded in the period to which they relate.

o Purchases and payables are recorded in the correct

accounts.

Cash payments

o Payments are only made for goods received.

o Payments are only made once.

o All payments are made on time.

PAYROLL

Clock cards (or timesheets) submitted.

o Employees are only paid for work actually done.

Payroll Calc

o Only genuine employees are paid.

o Employees are paid at the correct rates of pay.

o Gross pay is calculated and recorded accurately.

o Net pay is calculated and recorded accurately.

Standing data amendments

o Standing data is kept up to date.

o Access to standing data is restricted to prevent fraud or

error occurring.
Recording

o All payroll amounts are recorded.

o Payroll amounts are recorded accurately.

o Payroll costs are recorded in the period to which they relate.

Payments to employees and tax authorities

o Correct amounts are paid to the employees and taxation

authorities.

o Payments are made on time.

o Payments are only made to valid employees.

INVENTORY

 Inventory levels meet the needs of production (raw

materials and components) and customer demand (finished
goods).

 Inventory levels are not excessive, preventing obsolescence

and unnecessary storage costs.

 Inventory is safeguarded from theft, loss or damage.

 Inventory received and dispatched is recorded on a timely

basis.

 All inventory is recorded.

 Inventory should be recorded at the appropriate value.

 Only inventory owned by the company is recorded.

CASH CYCLE

 Petty cash levels are kept to a minimum, preventing theft.

 Payments can only be made for legitimate business

expenditure.

 Cash can only be withdrawn for business purposes.

  Cash is safeguarded to prevent theft.

 Receipts are banked on a timely basis to prevent theft.

 Cash movements are recorded on a timely basis.

Assertions

Monday, January 26, 2026

3:45 PM

SOFP "PRECC AVA"

 EX Bank

DOCUMENT ASSERTIONS

Bank st

Bank ledger acc

Cash bank

Bank Recon

Bank Existence, Rights and

confirmation Obligation, Completeness
letter

ASSERTION

Presentation

Rights and Obligation

Existence

Completion

Classification
 Allocation, Valuation
& Accuracy

SPL "COPAC"

AUDIT ACC

AR DOC ASSERTION

Bifurcation an Loan agreement P RESENTATION

CL/NCL
Bank St R EIGHTS AND
Covenants OBLIGATIONS
Bank
Financial confirmation E XISTENCE
expenses (int) Letter
C OMPLETENESS

C LASSIFICATION

A CCURACY V ALUATION
A LLOCATION

BANK AND CASH SUBSTANSIVE PROCEDURES

1. Cross reference the bank reconciliation bank statement

balance against the BLA balances, find the cause of
discrepancies.

2. Count physical cash against the cash recorded in cash

balances. Ensure that this belongs to business

3. Review the bank reconciliation statements heads

(unpresented checks, lodgements,), confirm the opening
bank st balance and closing the BLA balances match the
bank st and BLA.
 4. Recalculate arithmatic accuracy of these heads and the
existence of unpresented checks and uncredited lodgements
with bank statement after year end

5. Request the business to send a request to allow auditor

access to bank confirmation letter to confirm that all bank
accounts are existing

Non-Current Assets

Assertions Documents Audit Risks

Presentation Budget Capital VS Revenue Expenditure -> Existence

Rights and Obligations Asset Register for initial criteria
Existence Purchase Invoices Valuation; Subjective estimate, All class of
Completion Purchasing assets must be
Classification documents Revalued amount depreciation
Accuracy, Valuation and Independent valuer Disposal Still in asset register
allocation report P/L account gain or loss in disposal
Depreciation policy Depreciation policy useful life
Sale Invoice

 Balances
 Disposal
 Addition
 Revaluation
 Impairment
 Depreciation

RESEARCH AND DEVELOPMENT

ASSERTION DOC AR

Presentation Invoice R costs --> Capitalized

Rights and Obligations Time sheet PIRATE
Existence Project Plan Amortization
Completion Minutes Of Meeting
Classification
Accuracy, Valuation and allocation

 BANK AND CASH

 NCL
 NCA
 R&D

SUBSTANSIVE PROCEDURE

Tuesday, January 27, 2026

7:26 PM

Bank and cash

1. Obtain the bank reconciliation and cast to ensure

arithmetical accuracy.

2. Obtain a bank confirmation letter from Murray’s

bankers to confirm existence and rights & obligations.

3. Agree the balance per the bank ledger account on the

reconciliation to the year-end bank ledger account and
financial statements to confirm accuracy & valuation.

4. Agree the balance per the bank statement to an

original year-end bank statement and also to the bank
confirmation letter to confirm accuracy & valuation.

5. Trace all of the outstanding lodgements to the pre-

year-end bank ledger account, post-year-end bank
statement and to the paying in-book pre year end to
confirm accuracy & valuation and existence.

6. Trace all unpresented cheques through to a pre-year-

end bank ledger account and post-year-end statement.
For any unusual amounts or significant delays obtain
explanations from management to confirm accuracy &
valuation and completeness.

7. Examine any old unpresented cheques to assess if they

need to be written back into the trade payables
account to confirm accuracy & valuation and
completeness.

8. Inspect the bank confirmation letter for details of any

security provided by the company or any legal right of
set-off as this may require disclosure to confirm
appropriate presentation.

9. Review the bank ledger account and bank statements

for any unusual items or large transfers around the
year end, as this could be evidence of window
dressing. This verifies completeness, existence.

10. Count the petty cash in the cash box at the year
end and agree the total to the balance included in the
financial statements to confirm accuracy & valuation,
and existence.
NCA

1. Obtain the non-current asset register, cast and agree

the totals to the financial statements: completeness,
classification, presentation.

2. Select a sample of assets from the non-current asset

register and physically inspect them: existence.

3. Select a sample of assets visible at the Murray's

premises and inspect the asset register to ensure they
are included: completeness.

4. Inspect assets for condition and usage to identify signs

of impairment: valuation.

5. For revalued assets, inspect the independent valuation

report and agree the amount stated to the amount
included in the general ledger and the financial
statements: valuation; and ensure that all assets in the
same class have been revalued.

6. Obtain a list of additions and for a sample, agree the

cost to supplier invoice: valuation.

7. Select a sample from the list of additions and review

the description on the invoice to confirm that they
relate to asset expenditure items rather than repairs
and maintenance: existence.

8. Inspect a breakdown of repairs and maintenance

expenditure for the year to identify items which should
be capitalised: completeness.

9. For a sample of assets included in the non-current

asset register, inspect supplier invoices (for
equipment), title deeds (for property), and registration
documents (for motor vehicles) to ensure they are in
the name of the client: rights and obligations.

a. Disposals

i. Obtain a breakdown of disposals, cast the

list and agree all assets have been removed
from the non-current asset register:
existence.
 ii. Select a sample of disposals and agree sale
proceeds to supporting documentation such
as sundry sales invoices: accuracy of profit
on disposal.

iii. Recalculate the profit/loss on disposal and

agree to the statement of profit or loss:
accuracy of profit on disposal.

b. Depreciation

i. Inspect the asset expenditure budgets for

the next few years to assess the
appropriateness of the useful economic lives
in light of plans to replace assets: valuation.

ii. Review profits and losses on disposal of

assets disposed of in the year to assess the
reasonableness of the depreciation policies
(if depreciation policies are reasonable,
there should not be a significant profit or
loss): valuation.

iii. Compare depreciation rates to companies

with the same type of assets to assess
reasonableness: valuation.

iv. Recalculate the depreciation charge for a

sample of assets to verify arithmetical
accuracy: accuracy, valuation.

v. Recalculate the depreciation charge for

revalued assets to ensure the charge is
based on the new carrying amount:
accuracy, valuation.

vi. Perform a proof-in-total calculation for the

depreciation charged for each category of
assets, discuss with management if
significant fluctuations arise: completeness,
valuation. (Analytical procedure)

vii. Review the financial statement disclosure of

the depreciation charges and policies in the
draft financial statements and compare to
the prior year to ensure consistency:
presentation.
NCL

1. Obtain a breakdown of all loans outstanding at the

year end, cast to verify arithmetical accuracy and
agree the total to the financial statements:
completeness.

2. Agree the balance(s) outstanding to the bank

confirmation letter: accuracy & valuation, rights &
obligations.

3. Inspect the bank confirmation letters for any loans

listed that have not been included in the financial
statements: completeness.

4. Inspect the bank confirmation letter for details of any

security over assets and agree the details to the
disclosure in the financial statements: presentation.

5. Inspect financial statements for disclosures of interest

rates, and the split of the loan between current and
non-current: allocation, classification, presentation.

6. Recalculate the split between current and non-current

liabilities: allocation, classification, and presentation.

7. Inspect the loan agreement for restrictive covenants

(terms) and determine the effect of any loan covenant
breaches: allocation, classification, presentation. [If
loan covenants have been breached the loan may
become repayable immediately and should therefore
be included as a current liability].

8. Inspect the bank ledger account for loan repayments

made: existence, accuracy & valuation.

9. For the related finance cost in the statement of profit

or loss, recalculate the interest charge and any
interest accrual in accordance with terms within the
loan agreement, to ensure mathematical accuracy:
accuracy of finance costs in the statement of profit or
loss, completeness of accruals.

Bank and Cash

Bank recon to cgeck arithmatic

Bank confirmation letter

Existence of ACC

Recon bank ledger and YE balance

Recon bank st with bank st

Inventory assertions

Wednesday, January 28, 2026

3:42 PM

ASSERTION DOC AUDIT RISK

Presentation Purchase Overstatement of Inventory CA

Invoices
Rights and Lower of cost and NRV
obligations Sales
Theft
invoices
Existence
Destruction
GRN
Classification
Obsoleteness
GDN
Completeness
Perpetual inventory count
Credit notes
Accuracy having computerized system
Valuation Inventory bugs
Allocation account
Inventory count being
Bank inaccurate due to human error
statement
Inventory movement
Inventory
WIP
count sheets
Standard costs
Aged
Inventory list

ASSERTI DOC AR
ON
P Sales invoice BD

R Aged rec report

E Receivables circularisations

C Goods despatch notes

C Post-year-end bank statements and bank ledger

Policy for allowance for doubtful
AVA
receivables/credit losses

Letter from customer about bankruptcy

Minutes of meeting (dispute with customers)

NCL 9

1. Breakdown for outstanding loans and cast arithmetic

accuracy + agree w/ financial st

2. Agree outstanding balances to bank confirmation letter

3. Inspect bank confirmation letter for loans NOT included

in F ST

4. Inspect the bank confirmation letter for security over

assets and agree with disclosures in F ST

5. Inspect F ST for disclosure of interest rates, split b/w

CL and NCL

6. Recalculate split b/w NCL and CL

7. Inspect loan agreement for restrictive covenants and

determine effect of any loan covenant breaches (EX
transfer from NCL to CL)

8. Inspect the bank ledger acc for loan repayments made

9. Recalculate in interest charge and any interest accrual

in accordance with terms within the loan agreements,
to ensure mathematical accuracy.

NCA 8, 3, 7
8

1. 1 NCA Register compare total of st

2. 2 Sample from register then check physically

3. 3 Sample from premises then inspect register for

records

4. 4 Inspect for conditions and usage for signs of

impairment

5. 5 Revalue? Inspect for rev independent report amounts

agree, ensure all assets in class revalued

6. 6 List of addition and for sample, agree to supplier

invoice

7. 7 Inspect a breakdown of repairs and maintenance

expenditure to ensure relates to asset can be
capitalized

8. 8 Incl in NCA register, inspect supplier invoices, title

deeds, registration etc

1. 1 Breakdown , cast againt the list and agree all assets

have been removed from register

2 Sample, agree sale to proceeds with doc ex sundry sale invoice

3 Recalculate profit/loss

INV

1. Select a sample of items from inv count sheet and

physically inspect then in warehouse

2. Sample physical items from the warehouse to trace to

the INV count sheet to ensure they are recorded
accurately

3. Enquire management whether goods on behalf of third

party are segregated and recorded separately

4. Inspect the INV being counted for evidence of damage

or obsolescence that may affect the NRV
 5. Record details of last deliveries prior to the YE, this
info used in final audit to ensure no further
amendments made

6. Obtain copies of the INV count sheets at the end of the

inv count, ready for checking against the final
inventory listing at the final audit

7. Attend the INV count at the 3rd party warehouse

AT FINAL AUDIT

1. Trace the items counted during the INV count to the

final inv list to ensure same list being used at year end

2. Cast the list to ensure arithmetic accuracy

3. Trace goods dispatched immediately prior to ye in

general ledger to ensure not incl in inv

4. Trace goods received immediately prior to ye payables

and inv

5. Inspect po for client name

6. Inspect PO invoices for a sample of inv to agree the

cost of the items

7. Inspect post-year-end sales sample to ensure accuracy

of NRV

8. Recalculate WIP and FG valuation using payroll records

and utility bills for OH absorption

9. Inspect ageing inv itemd to identify old/slow moving

amounts that may req an allowance and discuss with
management

10. Calc inv holding period and compare to prior year

to identify slow moving inv which requires allowance to
reduce value

11. Calc the GP margin and compare to prior year,

investigate any sig diferrences that may highlight an
error in COS and CI

REC 12

1. Obtain the list of ind customers, cast it and agree with

F ST Totals
 2. Agree the t rec acc with the list of individual customer
balances

3. Selec sample of YE rec balance an agree with GDN and

sales order

4. Inspect After date cash receipts and folloe through to

pre year end balances

5. Selecy a sample of GDN before and just after YE and

follow through to the sale invoice to ensure they are
recorded in the correct acc period

6. Perform a positive rec circulisation of a representative

sample of y e balances for any non-replies, send a
follow up letter

7. Inspect aged rec analysis to identify any slow moving

and discuss these with the credit control manager to
assess whether an allowance or write down is
necessary

8. Discuss any significant balances with management to

identify any issues regarding payment

9. Inspect customer correspondance for slow moving

balances to asses if any invoices in dispute

10. Inspect board minutes to assess any material

disputed receivables that require write offs

11. Inspect ind customer acc with credit balances and

discuss reclassification to payables

12. Inspect a sample of post uear end credit notes to

identify those relating to preyear end transactions to
ensure they jhave not been incl in rec

13. AVG REC colectiion period prior to y e and discuss

any sig differen ces

BANK + CASH 10

1. Bank recon for arithmetic accuracy

2. Bank confirmation letter to confirm existence

3. Balance as per bank ledger in bank recon with balance

as per bank ledger acc
4. Balance as per bank st in bank recon with bank st
balance.

5. Trace all outstanding lodgements to pre year end bank

ledger and post year end bank st and to paying in book
pre year end to confirm

6. Trace all unpresented checks through a pre-year end

bank ledger acc ang post year end bank st

7. Examine old checks to assess of they need to be

written back

8. Inspect bank confirmation letter for details of any

security

9. Review bank ledger acc and bannk st for ay unusual

items or large transfers, may evidence window
dressing

10. Count petty cash in cash box and agree total to F

ST