Transaction Cycles and Tests of Controls

1. Why do you think the transaction cycles approach is employed by the auditor?

2. How does the auditor obtain an understanding of internal control of an entity? How is this understanding documented?

3. What auditing procedures are classified as tests of controls? How are tests of controls different from substantive tests?

Substantive Testing and Audit Programs

1. Discuss the concept of substantive testing. How are substantive tests related to tests of controls and the auditor's assessment of control risk?

2. What are analytical procedures and how are they used as substantive tests by the auditor?

3. How does an auditor substantiate the different financial statement assertions in an audit?