You are a trainee auditor and work for an audit firm in Hong Kong called Admiralty Partners. It is the middle of January and you are auditing at your client, Angel Ltd. a company which sells products to customers on credit. Your manager has asked you to perform the substantive audit testing of trade receivables at Angel Ltd.

While you are at Angel Ltd. the managing director asks to see you. She would like to know some detail of what your auditing colleagues were doing when they visited Angel Ltd. during the previous October. Her understanding is that this was a planning visit by the auditors but would like to have more detail of what activities were carried out in particular in relation to the work performed on controls testing. She does not understand why you are at the business in January doing even more testing and asks why this could not have been performed in the previous October visit. She also would like to understand the role of analytical review in the auditors work.

REQUIRED:

Write a memo to the Managing Director of Angel Ltd. discussing the purpose of each of walk through testing; controls testing and substantive testing.(for valid and clear discussion of each testing category required.)