Auditing Assignment Coursework Example

Auditing Assignment
Part I
A substantive analytical procedure to test assertions for existence, valuation, and accuracy of balances in the Ticket Sales Revenue account. This test will give an evidential matter if the amounts presented in the account truly exist and are accurate both in value and stated financial period.
In the Ticket Sales Revenue account, substantive analytical procedures can achieve better results than tests of details because they reduce the possibility of material misstatements when making assertions to a reasonably low level.
A substantive analytical procedure to test assertions for occurrence, cutoff, completeness, and accuracy of balances in the Ticket Sales Revenue account. This test will give an evidential matter if the transactions presented in the account actually took place, and are recorded both in value and stated financial period.
Substantive analytical procedures compare data from various sources to examine if presented data looks ‘odd’ or ‘wrong.’ In this case, the auditor unexpected variations or differences in the data determine if there is a need for an additional review, and this reduces the possibility of a material misstatement to a great extent unlike the test of details. Tests of details involve the tracking of figures in supporting documents to determine the validity, proper classification, accuracy and completeness of transactions. It may also include the confirmation and recalculation recorded information.
The Ticket Sales Revenue account has a “predictable relationship” because it covers transactions recorded over a period.

That is, from January to December 2015.
The Ticket Sales Revenue account has a “predictable relationship” because it covers transaction details recorded over a period. An auditor can use the total number of passengers who paid for tickets and prices of those tickets to predict the revenue earned.
As Stephen reviews the kind of data to request from Trusted Tickets and Coliseum, the type of disaggregation of data that might help him come up with a more precise expectation is the detail of the presented data. According to Morris and Thomas (2011), performing analytical procedures on detailed data gives better precision than performing analytical procedures on less detailed data. So, instead of requesting annual transactions, Stephen should request monthly transactions relating to the account.
As Stephen reviews the kind of data to request from Trusted Tickets and Coliseum, the type of disaggregation of data that might help him come up with a more precise expectation is the detail of the presented data. According to Morris and Thomas (2011), performing analytical procedures on detailed data gives better precision than performing analytical procedures on less detailed data. So, instead of requesting annual transactions, Stephen should request monthly transactions relating to the account. That includes the types of prices sold, their prices as well as the total number of passengers who paid during the month.
The data presented for auditing, in this case, is reliable. Most of the data are obtained either from the companies’ systems, books, or public websites, implying they are dependable for auditing purposes. Data provided by the client may not be as reliable as data obtained from within the company.
The data presented for auditing, in this case, is reliable. Trusted Ticket is an independent ticketing agency with internal controls and no ties to those who prepare the financials. Also, most of the data are obtained either from the companies’ systems, books, or public websites, implying they are verifiable for auditing purposes.
Where an analytical procedure has been used as the primary substantive test, the auditor should document three elements. First, the auditor has to document the expectation plus the underpinning factors, when the results obtained do not give any precise expectation. Second, the auditor should document the outcome after comparing actual results to expected results. Lastly, the auditor should document any auditing procedures undertaken as a result of significant unexpected differences during the analytical procedure.
Part II (See the accompanying excel file)

Reference
Morris, J. T., & Thomas, C. W. (2011). Clarified auditing standards: The quiet revolution. Journal of Accountancy, 211(6), 24-28.