EYU

Developing
our people

Perform Substantive
Procedures
Introduction
Your experience

© 2012 EYGM Limited Slide 2 Introduction

What we will do

Perform and document common substantive procedures on:

► Cash and cash equivalents
► Inventory
► Property, plant and equipment (PP&E)
► Trade receivables
► Income statement accounts (Payroll)
► Trade payables

© 2012 EYGM Limited Slide 3 Introduction

EY GAM roadmap

Planning and risk Strategy and risk Conclusion and

Execution
identification assessment reporting

Identify SCOTs, significant

disclosure processes & related IT
Complete preliminary
applications Prepare summary of audit
engagement activities
Understand service requirements, determine audit scope, and establish the team

Execute tests of controls

differences
Understand
SCOTs & Sig
disclosure Understand and
Understand the business processes evaluate the
Team planning event and discussion of fraud and error

FSCP Execute tests of journal entries

and perform other mandatory Perform financial statement
Perform procedures
fraud procedures
walkthroughs

Reassess combined risk assessments

Determine the need for Understand
specialized skills on the team

Wrap-up the engagement

ITGCs

Post-interim event
Design and
Select controls Prepare the summary review
execute tests of
to test memorandum
Understand entity-level ITGCs Update tests Update tests
controls of controls of ITGCs
Evaluate ITGCs

Perform overall review and

Identify risks of material Make combined risk assessments
approval
misstatement due to fraud
and determine responses
Design tests of controls

Design test of journal entries and Prepare and deliver client

Perform substantive procedures
Determine PM, TE, and SAD other mandatory fraud procedures communications
nominal amount
Design Plan general
substantive audit
procedures procedures Complete documentation and
Identify significant accounts Perform general audit
© 2012 EYGM
andLimited Slide
disclosures and relevant 4 Introduction procedures archive engagement
assertions
Prepare audit strategies memorandum
Substantive procedures

Sub
s Sufficient
ana tantiv
pro lytica e TODs appropriate
ced l ce
ure
s audit eviden

Ps
A

PS
CR

© 2012 EYGM Limited Slide 5 Introduction

Combination of procedures dependant on
CRA
Level of
confidence
95% Assurance
from other
Combination of procedures

substantive
procedures

Assurance
from primary
substantive
procedures
Assurance
from tests of
controls

0%
Minimal Low Moderate High
Rely on controls Not rely on

Combined risk assessment controls

© 2012 EYGM Limited Slide 6 Introduction

Case study scenario

► The engagement you have been

assigned to is Seats Company.
► Seats Company is a public
company.

© 2012 EYGM Limited Slide 7 Introduction

Key features of case study

► Procedures performed at entity location

► Interaction with senior and management representatives
► Audit plan
► Workpapers
► Detailed review by senior and debriefs
► Documentation
► Work in group, document individually
► GAMx workspace

© 2012 EYGM Limited Slide 8 Introduction

More information

► PM 1.1 – Case Study Instructions

► PM 1.2 – Workpapers Referencing Codes
► PM 1.3 – Documenting Evidence in MS Excel
► PM 1.4 – List of Suggested Takeaways

© 2012 EYGM Limited Slide 9 Introduction

Summary

► Performing substantive procedures will be a major activity

for you over the coming months.
► In this course you will reinforce the theory you have
already learned and apply it in a real-life scenario.
► In this course you will perform and document common
substantive procedures on:
► Cash and cash equivalents
► Inventory
► Trade receivables
► Property, plant and equipment (PP&E)
► Trade payables
► Income statement accounts (payroll)

© 2012 EYGM Limited Slide 10 Introduction