Question 1

Listed below are 15 substantive procedures:

1. Select a sample of non-current assets and sight them.
2. Review the income statement for unusual differences in the balance recorded for this and last year.
3. Select a sample of invoices and ensure that they have properly recorded in the sales ledger.
4. Review the company prepared bank reconciliation.
5. Trace the last inventory received before the year end to the inventory listing.
6. Review the adequacy of the company's allowance for doubtful debts.
7. Obtain the company's depreciation rates from the financial statements and check they have applied properly.
8. Perform a debtor's circularization.
9. Review a sample of repairs and maintenance expenditure for the year to ensure it does not include any items that are in capital in nature.
10. Ensure that interest paid on the bank loan is correct by multiplying the interest rate by the outstanding principal for each of the year.
11. Send a letter to the bank to confirm a loan taken by the company during the year.
12. Attend the year end stock-take and perform test of counts on sample of stock items.
13. 13. Ensure that all contingent liabilities have been included in the notes to the accounts.
14. Review all invoices received for one month after the year end to ensure that they do not relate to the current year.
15. Calculate debtor's turnover and compare with previous year turnover.

Required:

a) For each test, indicate the type of substantive procedure to which it relates (analytical, review, test of details of balances or test of details of transactions.

b) What is one assertion to which each test relates?