Fundamentals of Auditing

3.35

TECHNIQUES AND PROCEDURES OF AUDITING |

For example, an auditor may

• physically examine inventory on balance date as evidenced that inventory shown in the accounting

records actually exists (validity assertion);

• arrange for suppliers to confi rm in writing the details of the amount owing at balance date as evidence

that accounts payable is complete (complete assertion); and

• make inquiries of management about the collectibility of customers’ accounts as evidence that trade

debtors is accurate as to its valuation.

Evidence that an account balance or class of transaction is not complete, valid or accurate is evidence of a

substantive misstatement.

There are two categories of substantive procedures—analytical procedures and test of ...