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The main purpose of the Auditor in an audit is to provide an opinion on the fairness of presentation of corporate financial statements. To achieve these objectives Auditors must obtain sufficient audit evidence through the implementation of two types of audit test procedures, namely:
1. Procedure Adherence (Compliance Procedures)
2. Substantive procedures (substantive Procedures)
Submission Procedure
Obedience is the test procedure designed to achieve a rational belief of the Company's Internal Control techniques. Control to test only the material impact on financial statements presentation.
If the control indicates that the operation had gone as expected and planned, the auditor's work may include:
1. Reducing the level of testing Substantive Procedures
2. Perform some procedures on the date before the date of the financial statements.
Auditors may decide to not do in terms of compliance procedures of internal control is very weak and unreliable.
Substantive Procedures
Substantive testing procedures designed to obtain evidence about the completeness, accuracy and validity of data generated by the accounting system and the precision application of accounting treatment of transactions and balances. This is classified in 2 stages general audit procedures, namely:
1. Analytical Review
2. Detailed tests of transactions and balances (Tests of Details of Transactions and Balances)
Auditors should be directed to perform as efficiently as possible the necessary work to achieve a satisfactory audit results. The extent of audit testing levels will be applied in general is based on the judgment Auditors with respect to several factors as follows:
1. The extent to which a reliable internal control
2. Element of materiality in relation to the presentation of the overall financial statement
3. The nature and size of each post to form a specific estimate of the balance
4. The extent to which errors can be expressed
Analytical Review
The main purpose of the application of Analytical Review is to detect the possibility of the accounts kewajarannya financial reports in doubt (to evaluate the feasibility of financial information) as well as an initial step to determine the extent of substantive audit procedures to be done further. In addition, analytical review procedures are also needed to determine the necessity of applying additional audit procedures on an account's financial statements. Several methods Analytical Review which is often done in practice is the Auditor comparative analysis and financial ratio analysis.
Comparative analysis (comparative analysis) can be done by comparing the figures for the year's financial statements audited by:
1. numbers prior period financial statements;
2. budget or forecast (prediction);
3. corporate competitors data;
4. data relevant operational activities.
This analysis is primarily to detect any fluctuations in the financial statements which account for significant and require further testing procedures.
While in general the ratio analysis includes analysis of liquidity ratios, activity ratios, solvency ratios and profitability ratios.
In practice tests, there are times when the auditor can not apply the procedure Analytical Review in a state such as the unavailability of information and data required. In this case, as an alternative procedure to examine the auditor general ledger journals and books in whole or in part is essential to detect transactions that are not public accounting or other relevant information.
Test of Details of Transactions and Balances
Tests of details carried out by applying the procedures as follows:
1. Confirm balances
2. Observation / Inspection
3. Repeat calculation
4. Vouching
5. Reconciliation
6. Account Analysis
Confirmation
This test involves getting direct evidence that strengthen the (usually written) from a third party regarding the accuracy of the account balance, such as confirmation of bank balances, accounts receivable balances, account balances and other debts. Confirmation received from a third party can always be considered as stronger evidence than the data and information from the company's internal.
Observation / Inspection
This procedure provides evidence against the existence of tangible assets. Observation / inspection is also performed by corporate personnel along with the participation of auditors (eg observation and calculation of physical inventories) or inspection (eg physical inspection of securities, cash counting).
Repeat calculation
Recount procedures by the auditor of the previous calculations done by the company personnel are intended to prove the accuracy of the calculations in the accounting firm. For certain accounts such as a recount of fixed assets depreciation provision, the auditor in addition to testing the mathematical accuracy of the calculation is performed, should also examine the accuracy of depreciation methods applied by the company and acceptability of the estimated life of assets used in the calculation.
Vouching
Vouching means the basic document examination that aims to determine the accuracy of a transaction. Vouching steps that must be done include:
1. Ensuring that the company has implemented procedures and requirements set forth in the Standard Operating Procedure (SOP)
2. Examine relevant documents
3. Ensure that the transaction is a logical in certain circumstances (eg the date the document included in a logical period of approved transaction date)
Vouching procedures can be performed on documents originating from an independent outside party (such as invoices from suppliers, bank statement etc.) or documents created by the companies themselves (such as sales invoices, reports the allocation of costs, revenues and other reports).
Reconciliation
Reconciliation is the process of identifying the cause of the difference between the two numbers relate to one of them is usually the account balance on the books. For example: rekonsilasi match bank statement balance with the bank balance in the ledger, reconciliation of balance on the sales ledger with the reported sales balance in the SPT Masa PPN, and others.
Account Analysis
Includes classification and Summarization activities an account to obtain reasonable assurance about the fairness of the transaction-system items that make up an account. For example the test on the movement of fixed assets account balance covers the early years of testing, addition, subtraction and the balance at the end of the year, testing the items that make up the final balance of accounts receivable sales transactions of material value and revenue settlement receivable transactions, and others.
Consider the implementation of the audit period is generally limited, the procedure should be done analaysis account is limited to transactions of material value and suspicious (HRD).