SA 320 – User of 1- Previous Result 1- Walk Through

FS Consideration 2- Integrity of Understand Process,

Management Risk and Control
3- Business Nature 2- Control Testing
4- Complex Transations Assertion E E C
Testing
 PO (Purchase Invoice and
Quotation
• Risk – Approval ?
•Risk- Vendor can be Order) •Risk – Poor Quality payment
finalized on personal •Control- Quality check by
• Control – Approved by •Risk – Purchase from biasness •the Payment Cheque Risk-
•PO created for final Expert
related party •Control- Meeting by Excess Payment made
three Level Vendor and approved •Risk – Less Quantity
•Control- Vendor Different department Control- Finance Department
Approved by BOD with
by Authority received reconciliation all the PO terms
Personal
Annual Evaluation •Control- Quantity is with Delivery Information
Purchase checked by store Risk- Unauthorized Payment
Quotation Final department Control- CFO or CEO signed
Request
Material
Received
 1. Select 2. Test
25 Relevant
samples Control

3. Assertion
5. HIGH Effectiveness
Medium Efficiency
Low Continuity

4. Final
Decision
?
 Obtain
schedule of
Purchase

Samples
Upload ledger
in Software
At this stage we get
From
Software E.g- IDEA
(KPMG)
the samples for
testing of financial
statement.
Put –
Put Risk –
Materiality
(IR*CR)
(SA 320)
C-Completeness V- Valuation

E- Existence O/R- Right & Obligation

A- Accuracy P- Presentation
 • Judgement of a person is not subordinate to wishes of
Independence of another person
Auditor • He should not act under any influence. Thus, he can work
in a complete unbiased manner.

• Auditor Can not give Absolute Assurance he can only give

Reasonable Assurance due to Inherent Limitation of
'true & fair view Audit.
• Time & Cost, No. Of transaction, Risk, Fraud, Assumptions

Mis-statement that can effect the

Material Mis-
statement economic decision of user of Financial
statement.