QUESTION # 1

You are on the audit of a Company with Year ending December 31, 2019. Substantive Testing can be done either through Substantive Analytical Procedures or through Substantive Tests of Details.

1. For each of the following, perform substantive analytical procedures to verify the balances.
2. Based on your results, suggest whether the substantive analytical procedure is sufficient or not. If not, suggest what could be the reason and what the auditor should do next.

1. Petrol cost related to sales teams cars (7 marks)
2. Canteen cost (3 marks)

Data:

• Last year (2018) petrol cost = Rs 5,400,000
• Current year (2019) petrol cost = Rs 7,741,000
• Number of sales team cars in 2018 = 45
• Number of sales team cars in 2019 = 54
• Average petrol rate in 2018 = 85
• Average petrol rate in 2019 = 105
• At the start of this year you have shifted from PSO to Shell cards and have received a 5% discount on your bill
• Last year canteen cost = Rs 12,500,000
• This year canteen cost = Rs 13,500,000
• Last year average employees = 125
• Last year average employees = 140
• Average food inflation % = 14%