Substantive procedures

Initial Procedures
-Obtain a management representation letter including reference to all applicable assertions
relating to .
-Obtain a listing of accounts/Masterfile
-Inspect the accounts for an unusual amounts
-Inspect the closing balance of last year is the opening balance of the current year
-Test the castings and calculations in the general ledger account/transaction file for mathematical
accuracy
-Inspect that the closing balance as per general ledger agrees to the amount in the trial balance and
general ledger
Analytical procedures
-Perform analytical procedures by:
-Comparing the current year to prior year information .
-Comparing the actual results to the anticipated results of the entity
-Comparing company to similar industry information ..
And investigate relationships that are inconsistent with other relevant information by
enquiries of management and inspection of supporting documents
Subsequent procedures
Existence/occurrence
-Obtain and inspect the notice of the board meeting for disclosure of the directors interest in the
transaction and its general nature
-Obtain and inspect the minutes of the board meeting signed by the chair of the board authorising
the transaction for
-The required number of directors voted in favour of the transaction
-The quorum requirement for attendance was met
-Director X with financial interest
o Disclosure by the director of any material information relating to the matter
o Director left the meeting after making the disclosure, and
o Did not take part in the consideration of the matter
-Obtain the memorandum of incorporation and inspect
-That no restriction on transaction of this nature exist and whether there are any terms which
the company must comply with
-For any company specific requirements of the quorum of shareholder
-Obtain and inspect the minutes of meeting of shareholders and inspect
-That the required quorum was present
-The Memorandum of Incorporation for any company specific requirements of the regarding
resolutions
-That at least 75% (or company specific) of the voting rights exercised on the resolution voted
in the favour of the resolution at the duly constituted meeting
-A copy of written notice of resolution sent to all shareholders and trade unions to ascertain
compliance with the requirement of section 45
-Obtain and inspect the register of directors interest in contracts for the requisite disclosure
-Obtain and inspect agreement with third party for the terms and conditions pertaining to the
contract, including the contract duration, the contract amounts and any escalation clauses
-Obtain and inspect the contract/purchase agreement/invoice for
-The name of Company X
-The signatures of appropriate representatives of Company X
-Description of the asset acquired
-The selling/purchase price

-Effective date
-Observe the staff from the third party/Enquire from staff at the client whether the third party has
been fulfilling its duties effective from the date of the contract
Valuation
-General
-Read through the workings and supporting documentation of the client to obtain an
understanding of how to .
-Inspect the bank statement/returned paid cheque for the amount of the purchase/sale
paid/received for .
-Select a sample of invoices/contract and follow them through to the accounting entries and
inspect that they are recorded at the correct amount
-Cost of an Inventory
Cost inventory
o Inspect the purchase documentation/shipping contract/invoice to confirm if
the correct purchase price has been used by management in calculating the
cost
o Obtain an exchange rate from an independent source and inspect that the
correct exchange rate was used to convert foreign currency into local
currency
o By enquiry of management and inspection of invoices from transporters,
confirm that the relevant carriage costs have been included in the cost
calculation
o Enquire from management if there are any costs directly attributable to
bringing the asset to the location and condition necessary for it to be capable
of operating in a manner intended by management
o Inspect invoices for dates and confirm that costs after the date which the asset
was in the location and condition necessary for it to be capable of operating
in a manner intended by management are not included in the cost of the asset
o Re-perform the cost calculation
o Agree the value to per the report to the general ledger and trial balance
Inventory
Inspect that management has appropriately applied the requirements of IFRS based
on our understanding of the entity and its environment with regards to estimates
Obtain managements current and prior year workings
o Inspect that the method used to calculate allowance amount is consistent and
in
condition of the asset to determine whether the value in disclosed in the financial
statements is reasonable
Enquire from management as to whether there are any changes in the environment or
circumstances that affect the estimate
Inspect that the method for making accounting estimates has been consistently
applied by comparing the method used in the current year to prior years
Inspect the assumptions used by the management and consider their reasonableness in
the light of known information
o Inspect that events agreement with the accounting policy disclosed
o Inspect that the accounting policy has been consistently applied in prior years
and in the current year

Inspect the current physical occurring up to the date of the auditors report provide
evidence regarding the estimates
Agree the value to per the report to the general ledger and trial balance
This difference can be taken to the schedule of audit differences, based on the discussion
held with management on the differences noted
Allowances
Discuss with management any procedures in place for the approval of final allowance
Obtain a sufficient understanding of the assumptions and method used by
management in making the accounting estimate by inquiry of management
Obtain managements current and prior year workings
o Inspect that the method used to calculate allowance amount is consistent and
in agreement with the response from management
o Inspect that the method obtained from management has been consistently
applied in prior years and in the current year
Inspect whether management has appropriately applied the requirements of IFRS based
on our understanding of the entity and its environment with regards to allowance
Compare allowances raised in the previous years to actual write-off in subsequent years to
determine accuracy
Perform analytical procedure to obtain a general overview as to the reasonableness of the
by comparison of current year figures and previous year figures
Develop a point of estimate or range to evaluate if managements point estimate is
reasonable
Enquire from valuer as to whether there are any changes in the environment or
circumstances that may affect the allowance
Inspect the assumptions used by management and consider their reasonableness in the
light of known information about allowance
Inspect that the conclusion reached by managements is in line with their findings
Inspect that events occurring up to the date of the auditors report provide evidence
regarding the provision
Re-perform the managements calculations to determine the amount of allowance
Agree the allowance to per the report to the general ledger and trial balance
This difference can be taken to the schedule of audit differences, based on the discussion
held with management on the differences noted

Completeness
-Inspect journal entries in the client recognizing/derecognizing transaction
assets/income/expenses/liabilities
-Physical assets
-Inspect that all costs that are to be capitalized, have been done so correctly by reviewing the
cost records for the period under review
-Inspect that all costs that are to be expensed, are correctly expensed by reviewing supporting
documentation such as receipts of payment or creditor statement
-Perform a walkthrough and inspect all assets that should be included in the documents are
correctly recorded
Cut-off
-Inspect the date on the invoice/purchase agreement/contract to confirm that the transaction took
place within the .. financial year
Presentation and disclosure
-Inspect the financial statements disclosures and consider that:

-They are complete in terms of IFRS (Be specific; e.g. IAS 16)
-Accounting policies
-Notes
-They are consistent with evidence gathered on the audit
-Amounts, facts, details etc. are accurate and agree with evidence gathered
-The wording of disclosure is clear and understandable
-Any classification of information is disclosed is appropriate
Additional audit procedures to establish whether an item is in the scope of IFRS
-Inspect the terms of the contract and confirm the following in the contract
-The contracts is indeed for .
-The existence of the clause in the agreement .
-The time of delivery is indeed in .
-IFRS requirements
-Enquire from management
-About third partys intentions
-Inspect previous transactions with the same party
-Conclude
-Inspect the journal entries and the accounting records to confirm that the transaction is correctly
recorded