substance
BLG & Co., CPAs
306 3rd Flr. MSA Second St.,
Ayala-Alabang, Muntinlupa City
Philippines
SUBSTANTIVE TESTS – PURCHASE/ACQUISITION TRANSACTIONS
ASSERTIONS
OBJECTIVE
PROCEDURES
I. Existence Or Occurrence
II. Rights and Obligations
To determine that recorded purchases are for items that were acquired.
To determine that purchases are the entity’s acquisitions and liabilities.
For a sample of purchase transactions recorded in the purchases journal, trace vouchers to authorized purchase order & receiving report.
For a sample of purchase vouchers, test posting to the purchases journal & Accounts Payable subsidiary ledger for the correct amounts
III. Completeness
To determine that purchases that occurred are recorded
Trace a sample of vouchers to the purchases journal.
Compare the dates on a sample of vouchers with the dates they are recorded in the purchases journal.
IV. Valuation or Allocation
To determine that purchases that are recorded for the proper amounts.
Vouch selected purchase transactions recorded in the purchases journal to the voucher packets, thus ensuring that they were obligations of the entity.
Recompute the mathematical accuracy of a sample of purchase vouchers.
Verify classification of charges for a sample of purchase transactions.
Verify classification of charges for a sample of purchase transactions.
V. Presentation and Disclosure
To determine that the receivables are properly presented and classified in the balance sheet.
Evaluate financial statement presentation and disclosure of payables.
Test a sample of vouchers to ensure that the nature of the transaction is consistent with the normal course of business.
Prepared by: LOWIE BEJO Reviewed by: QUEENIE LEBIOS Senior Auditor Audit Manager
Approved by: GIRLEY BANEZ
Engagement Partner
306 3rd Flr. MSA Second St.,
Ayala-Alabang, Muntinlupa City
Philippines
SUBSTANTIVE TESTS – PURCHASE/ACQUISITION TRANSACTIONS
ASSERTIONS
OBJECTIVE
PROCEDURES
I. Existence Or Occurrence
II. Rights and Obligations
To determine that recorded purchases are for items that were acquired.
To determine that purchases are the entity’s acquisitions and liabilities.
For a sample of purchase transactions recorded in the purchases journal, trace vouchers to authorized purchase order & receiving report.
For a sample of purchase vouchers, test posting to the purchases journal & Accounts Payable subsidiary ledger for the correct amounts
III. Completeness
To determine that purchases that occurred are recorded
Trace a sample of vouchers to the purchases journal.
Compare the dates on a sample of vouchers with the dates they are recorded in the purchases journal.
IV. Valuation or Allocation
To determine that purchases that are recorded for the proper amounts.
Vouch selected purchase transactions recorded in the purchases journal to the voucher packets, thus ensuring that they were obligations of the entity.
Recompute the mathematical accuracy of a sample of purchase vouchers.
Verify classification of charges for a sample of purchase transactions.
Verify classification of charges for a sample of purchase transactions.
V. Presentation and Disclosure
To determine that the receivables are properly presented and classified in the balance sheet.
Evaluate financial statement presentation and disclosure of payables.
Test a sample of vouchers to ensure that the nature of the transaction is consistent with the normal course of business.
Prepared by: LOWIE BEJO Reviewed by: QUEENIE LEBIOS Senior Auditor Audit Manager
Approved by: GIRLEY BANEZ
Engagement Partner