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What is meant by appropriateness of audit evidence?

Appropriateness of audit evidence  is the measure of the quality  of the audit evidence that is its relevance and its reliability in providing support for the conclusion on which the auditor’s opinion is based. It is one of key characteristic of good audit evidence. The other characteristic of audit evidence is sufficiency of audit evidence. Relevance of audit evidence is … Read the rest

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Reason why ‘completeness’ is a major objective in the audit of liabilities.

It is always emphasized that one of the major audit objectives in the audit of liabilities is that of ‘completeness’ and that auditors should ensure that their audit works adequately cover this objective.

The assertion of completeness is critical for liabilities such as trade creditors and accrual salaries and wages because such liabilities are usually an audit area of significant … Read the rest

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substantive procedures for evaluating going concern status of the entity

Going concern this assume that the entity will continue to operate for the foreseeable future with neither the intention nor necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws and regulation.  

The following are tests and procedures the auditor needs to perform to form an opinion on management conclusion that the company is going concern:

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Audit substantive procedures for directors emoluments.

Director is someone given the power to supervise day to day operation of the entity. 

The following are substantive procedures for auditing director’s emoluments:

  • Obtain schedule of emolument paid to directors during the year and agree with financial statement disclosure
  • Inspect minutes of board of directors to ensure there are no undisclosed bonuses or other remuneration
  • Inspect bank statement to
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Substantive procedures for contingencies.

The following are substantive procedures for auditing contingencies

  • Follow up contingencies reported in last year.
  • Discuss with management (also obtain written representation if necessary)
  • Review minutes of board of directors meetings
  • Review client’s correspondence with lawyers and invoices for legal services
  • Send confirmation to external legal counsel (listing specific areas where contingencies may exist)
  • Check status subsequent to reporting period
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Audit substantive procedures for tangible assets depreciation or impairment expenses.

Impairment of asset occur when net book value of asset is GREATER than market value of asset or value in use whatever is greater. guidelines for how to account for impairment is given in IAS 36.

The following are substantive procedures for impairment and depreciation of tangible non current asset:

Review fixed asset register to ensure:

  • depreciation has been charged
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