ACCA AAA ^INT Syllabus D. Audit of Historical Financial Information - Using Assertions - Notes ^{3 / 9}

This is done by

1. Inspection

   • This means a physical examination

   • Things to inspect include: documentation, contracts, records and minutes.

   • It also includes physical examination of the assets. 

     This enables the auditor to verify the existence (though not ownership) of them

2. Observation

   • This means watching others perform a procedure

   • Examples include observation of 

     Payment of wages
     Inventory counts
     Opening mail

   • It gives assurance that official procedures are followed

3. Inquiry

   • This means getting information from people inside or outside the entity.

   • It can be a formal written or an oral inquiry

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5. Confirmation

   • This means corroborating evidence from third parties with the internal evidence

   • For example, confirming accounts receivables by circularising the debtors

6. Re-Performance

   • This can be recalculating figures or re-counting stock etc

7. Analytical Procedures

   • This is the analysis of ratios and trends

   • It includes investigating fluctuations between current and previous performance and check whether other information is consistent with such relationship.

   • For example, comparing the rent charge from one period to the next and see if other evidence such as number of rental properties corroborates the increase or decrease