With reference to the case study business, identify appropriate audit tests to be carried out. Prepare a statement of the work to be carried out and the manner in which it will be recorded for the audit report.
Audit Test
Referring to the case study auditor can use, apply management ascertain act of all plan audit and far each audit engagement team member prepare an audit programe and identifies objectives he want to achieve, e.g.
Audit plan is prepared to verify assets
First assertion is tested through physical control whether asset is valued properly valuation at cost or fair value, if at cost revalued or not, asset is physically is existing or not is 2nd assertions tested through personal observation , inspection: inspection is risk assessment procedures used to apply to check management assertion of existence, presentation: disclosure is also relevant whether transactions are properly recorded , classified in ledgers and reported in statement, walk through test is used to check the another ascertain completeness.
All these assertions are related to this case study, as asset is recorded as an expense, not properly classified so test is used to check this assertion, transactions for sale purchase, inventory and other weak through test is used and analytical procedures to check completeness assertion.
Measurement is also checked by checking estimates and companies polices by verifying asset management assertion of rights and obligation could also be judged that whether asset is purchased on cash or it is a leased asset
Any right obligations allotted to it then go to transfer deed or lease agreement so all these tests are used to test to justify the reliability of the financial statements