Using Assertions

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So the assertions need testing to see if they're true

This is done by

  1. Inspection

    • This means a physical examination

    • Things to inspect include: documentation, contracts, records and minutes.

    • It also includes physical examination of the assets. 

      This enables the auditor to verify the existence (though not ownership) of them

  2. Observation

    • This means watching others perform a procedure

    • Examples include observation of 

      Payment of wages
      Inventory counts
      Opening mail

    • It gives assurance that official procedures are followed

  3. Inquiry

    • This means getting information from people inside or outside the entity.

    • It can be a formal written or an oral inquiry

  4. Confirmation

    • This means corroborating evidence from third parties with the internal evidence

    • For example, confirming accounts receivables by circularising the debtors

  5. Re-Performance

    • This can be recalculating figures or re-counting stock etc

  6. Analytical Procedures

    • This is the analysis of ratios and trends

    • It includes investigating fluctuations between current and previous performance and check whether other information is consistent with such relationship.

    • For example, comparing the rent charge from one period to the next and see if other evidence such as number of rental properties corroborates the increase or decrease

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