Para 2.1.11 — MSO (Audit)
Original Rule Text
2.1.11 Three audit procedures are commonly used to obtain audit assurance. These, which are applicable to all types of audit are:
(i) compliance testing;
(ii) analytical review; and (iii)direct substantive testing of transactions.
# A. Compliance Testing
What This Means
There are three standard audit procedures used to obtain assurance in all types of audit: compliance testing (checking whether internal controls work), analytical review (analyzing trends, ratios, and data patterns for anomalies), and direct substantive testing (examining actual transactions and balances for errors). These three methods form the auditor's core toolkit.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Three standard audit procedures: compliance testing, analytical review, and substantive testing
- 2Applicable to all types of audit
- 3Compliance testing evaluates internal controls
- 4Analytical review looks at trends and ratios for anomalies
- 5Substantive testing directly examines transactions and balances
Practical Example
When auditing a customs port, the team would use all three procedures: compliance testing to check if the duty assessment supervisors are doing their required test-checks; analytical review to compare this year's duty collection trends with previous years; and substantive testing to verify actual duty calculations on a sample of import consignments.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
Do auditors use all three procedures in every audit?▼
Which procedure is most common?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.