Question

something new and genuine please

You are currently working in a mid-tier accounting firm. In an engagement meeting with a client, the management of your client is concerned that the audit tests that you perform will disrupt operations. Your client has recently implemented a data warehouse and the management suggests that you draw the data for analytical reviews and substantive testing from the data warehouse instead of the operational database. The management points out that operational data are copied weekly into the data warehouse and all data you need are contained there. Outline your response to the management’s proposal and mention any concerns you might have. (10 marks, maximum 300 words)

Answer 1

The Analytical review is just the comparision between the current year and the previous year . TheAnalytical review is used when there is greater difference between the Current and Previous year This testing is used to identify unusual transaction during current year .Substantive audit procedure examine the financial statements and supporting documents to see if they contain errors . This test needed as evidence to support the ascertaine the financial record of the entity are complete valid and accurate.As far as concern addition to the Analatical review and the substantive testing it is required to test atleast once physicaly all the working areas and if possible to visit all the premises of the company .As the management intention is to audit based on the documents available it is not proper in certain areas . So the auditor shall not accept such offer made by the management.