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Substantive Procedures: P/L pt 1 (Other Income (Audit tests (3.1 Follow…
Substantive Procedures:
P/L pt 1
Sales
Pre-lim analytical procedures: a) Identify key risk areas b) Obtain explanations for fluctuations
Eval effectiveness of ICs and effect on N,T,E of Substantive Procedures
From Source Documents
3.1 Delivery Notes: a) Inspect for client signature b) Inspect for gate guard signature b) If perpetual stock records kept follow DN to Stock records & agree amounts and details
3.2 DN - Invoice: a) Agree client name, date and details b) Agree quantity and description c) Compare invoice price to price list d) Inspect credit terms to ensure CR Lmt not exceeded e) Inspect sales manager signature for auth of sale f) Test casting and calculations g) Test Vat calculation
3.3 Invoice to SJ: a) Agree sales & VAT amount b) Agree date and details c) Test that amount in sales column is ex VAT d) Test that VAT per invoice correctly posted to VAT column
3.4 List of invoices a) Inspect for missing numbers and follow throught to physica; invoice and obtain reasons for omissions
GL - Docs: a) Agree total sales per gl to sj b) Select sj sales follow to invoice & DN c) Agree details d) Inspect client sig on DN
Credit Notes
5.1 Examine CN a) Inspect snr official sig of auth b) Agree quantity to DN & invoice c) Agree price to invoice & price list d) Inspect for correct VAT treatment e) Test castings & calculations
5.2 Review numerical list for ommissions and obtain reasons for ommissions
Accuracy a) Test castings & Calculations of SJ & GL b) Agree amounts posted from SJ to GL for sales & VAT c) Follow GL Sales Total to TB & AFS
Cut-off a) Select Invoices, DLNs, CNs before & after YE and confirm recognised in correct period b) Ensure sales in SJ accounted for in terms of DLN date & provision is made for uninvoiced sales
Final Analytical a) Sales CY v PY b) Credit sales /Debtors bal CY v PY c) Sales/CoS CY v PY
Compare budget and PY amts and investigate deviations
Review SJ & GL for extraordinary items
Examine pro-formas to confirm intragroup & branch sales eliminated
P&D
Man Rep Letter
Cash Sales a) Ensure clearing account has nil bal if not inspect recon and test validity of reconciling items
Other Income
Perform analytical procedures and obtain explanations for extraordinary items
If amounts not material SAPs sufficient
Audit tests
3.1 Follow source documents to GL and agree dates, details, amounts, inspect document for validity, ensure vat treatment
3.2 Test castings & calculations of GL
3.3 Review GL for extraordinary amounts
Cash book to source documents to GL: a) Trace any debits to source documents b) Review B/S for deposits not accounted for and follow up
GL - Documents a) Agree date and amounts b) Ensure correct vat treatment
Test Cutt-off: a) Select items from the CB before & after YE and follow to GL and confirm recognised in correct year
Follow GL bal to TB & AFS
Compare Budget & PY to actual and investigate deviations
Inspect classification and ensure correct in terms of IFRS
P&D
Man Rep Letter
Investment Income
3rd party confirmation a) Investment bal b) Income received
Examination of documentation a) Investee AFS b) Declarations c) Stock Exchange notices or lists
Analytical Procedures: a) Compare return to market return b) Compare income to prior year
Rental Income
Reference to a) Lease contracts b) Correspondence files c) Analytical procedures ROA v market & PY
Ensure rent receivable taken into account a) Recalculate rent and compare to recognised amount b) Recalculate accrued income