Week 5 discusison and participation questions - Essay Example

The cycles differ in methodology, time requirements, documentation requisites, man hours needed, and complexity. The accounts payable account is very important because most acquisition and payment transactions go through that account. Due to the fact that the accounts payable account is usually material auditors often have to use extensive analytical procedures and tests of details of balances. Accounts payables can be defined as unpaid obligations for goods and services. The methodology to perform an audit of accounts payables is illustrated in the following steps: It is amazing how accurate and reliable independent audits of financial statements are.

There are tens of thousands of audits performed yearly on public companies and auditors accurately determine when any material misstatement or fraudulent activity occurs. Two analytical procedures that can be used to compare data and information from the financial statements is vertical and horizontal analysis. The use of statistical models can help auditors determine the audit risk very accurately. Material misstatements can be identified accurately by the auditors when they have the full honest cooperation of the accounting and managerial staff.

Your assessment of the importance of test controls is very accurate. If an auditor determines that the managerial staff established good internal controls the auditor has a better audit trail to follow. Substantive test are critical for auditors to determine whether a company is subject to audit risks. If a company has internal weaknesses within the accounting department substantive tests can detect these types of accounting anomalies. It is true that auditors often assumed that if the internal controls of the company are strong the risk of fraudulent behavior is lower.

The ability of auditors to identify risks and ways to fix those risks to improve the efficiency of an operation is a value added proposition of auditing work. Substantive