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According to International Federation of Accountants (IFAC), effective from 15 December 2009, the  undertaking auditor shall perform, design and prepare procedures in substantive tests for each sections of primary transaction, balance of accounts, and material disclosure, irregardless of the risks assessed, for what may consider the application only of substantive analytical procedures or detailed tests  or a combination of analytical procedures in substantive test and tests of details.(Cosserat and Rodda, 2009)
According to ISA " procedures in Substantive tests " means performed tests to get evidence in audit to detect significant misstatements in the statements of finances, and are divided into two cartegories:
(A) detail tests of balances and transactions ; Y
(B) Substantive Procedures in Analytical tests
The substantive procedures must raise an inversely proportional to the results or absence of evidence to reach controls.
That is, tests controls in the results of the test were satisfactory (positive) the scope of our substantive testing should be less, but if the test results to the controls were not satisfactory (negative) or not perform testing controls the scope of our substantive tests should be higher(Anandarajan and Kleinman, n.d.). For these cases it is necessary that the auditor use professional judgment to determine whether evidence obtained is sufficient and appropriate to enable it to conclude whether the audited figures are reasonable.
 What procedures we use to cover the risk of expenses account like;

Audit of salaries and wages account

1. Review the internal regulations of the institution salaries and compensation paid to employees and agree to the provisions of special laws and internal regulations.
2. Check against payroll file that calculations of salaries have been made according to the worker's seniority.
3. Request a list of salaries and compensation paid to workers, and the year-end bonus and check the salaries account and wages that protect such payments.
salaries and wages benefits:(Millichamp, 2002)

1. Check the monthly accounting provision for the concept of social benefits, including retroactive effects and wage increases established in collective agreement and by decree - law.
2. Check that the payment for social benefits has been reduced from the provision and credited to the account of social benefits fund or trust if any.
3. Ensure that the payment of wages benefits is accompanied by the following documents:.-
payrolls, pin numbers, number of employees and amount.

4. Evaluate the salary and wages final balance, the paid up expense against the records shown in salaries and wages account.

Substantive audit procedures for electricity account 

Check your fair presentation and disclosure in the financial statements recording on the electricity account. f) Check that the cost of electricity for the month and the year and that it actually corresponds to transactions and events actually made during the period and have been determined in a reasonable and consistent manner. e) Ensure that there is consistency in the application of  expense valuation methods in accounting for electricity as an expense account  d) Check proper valuation, taking into consideration not exceeding their realizable value c) To determine the existence of encumbrances check their proper electricity cost in the billing statements. From here you can see the importance of electricity cost, because it depends largely on the percentage of profit, since you cannot always have full control over the expense especially in fluctuating market electric cost. Compare the two and get the true value of the cost of electricity.

Audit procedures for repairs and maintenance account

The audit procedures objectives and others are:

  1. a) compliance determination, adequacy and reliability of internal control in force;
  2. b) adequate determination that records tests in plant, property and equipment, which allow the right classification of the PPE in accordance to their characteristics, such as the control in time of the specific use, disposal or remain to repairs and maintainance of the accounts.
  3. c) physical inspection and determination that they exist and are in usable capacity;
  4. d) relative documentation determination owned by the entity or body;
  5. e) additions determination in the period include duly charges capitalized and represent physical properties constructed and installed or if they are expensed items charged that will be capitalized;
  6. f) correct valuation in determination of the repair and maintenance balances and account
  7. g) expenditures accrued determination by values that are significant corresponding to all assets withdrawals in respect to repairs and maintenance cost that do not act as depreciations and have been erased from the financial statements.
  8. i) Determine the basis of presentation are coherent;
  9. j) financial statements determination have been shown and any limitation or encumbrance to impose on the repairs and maintenance that add up to these accounts.

Procedures in  Audit

 The main audit procedures that usually apply in examination of repairs and maintenance accounts are:

  1. a) Evaluate the performance, reliability and adequacy of internal control in force;
  2. b) Prepare a charter containing the summary list showing of plant, property and equipment and cumulative depreciation balances and showing, new additions, withdrawals and final balances;
  3. l) The cost of materials used against the relevant documentation;

 2.) The cost of repair and maintenance labor against the respective payrolls;

3.) The indirect costs of the work, noting that these refer to the engineering department, construction or some other department involved in one or more works;

4.) Proper capitalization of interest during the repairing period, if the work has been financed with other costs

The work completed to form an idea of the relationship of costs incurred against the physical structure of the work. In the event of budget verify that the addition has been referred to therein, verifying the significant variations in the cost of acquisition and obtain the necessary explanations on procurement not covered by the budget and apparent unnecessary additions.(Saxena et al., 2010. Check if the property periodic repairs counts are made and plant and equipment, and if the detected costs have been adjusted. 

These financial statements would be difficult to accept by users when they have not been cleared and this for two main reasons:

1) They have been made with honesty but in a careless manner.

2) have been deliberately falsified.

Therefore the audit has enormous significance for users of accounting information. The audit comes as the last phase of the accounting process, being an end control of this process. This way the audit is a guarantee mechanism that validates the process of accounting training in protecting the interests of those associated with the company.(Saxena et al., 2010)

Responsible opinion on the reliability of such information so that you can know and appreciate this information by third parties using the information.

  • Verification of the originality of the accounts and payable notes, control and proper registration .• Check that the proper registration payable amaounts, in every respect, relate to obligations of the entity and are reasonable for the amounts that are intended.
  • Check that the related amounts in normal operations of the entity represents valid transactions are properly identified and are recognized, described and classified properly.

Testing the System

  • Cross with the general ledger analysis of the accounts that confirm this item, verify amounts and reference in the working papers.
  • Obtain and review the ballots movement of long-term debt (including accrued interest and accrued) for the purpose of determining the short and long term.
  • Separate the most important account balances in order to perform the analysis of the verification thereof.
  • Perform circularization balances and the answers do the following:

- Compare the balance confirmed by the supplier, with the balance of books.

- For those balances that differ do the following:

 Review the supporting documentation of the obligation.

  1. Verify that the acquired well has entered the store.
  2. Check the approval of the transaction.
  3. Verify that the service has been received. 


In this case the audit assistant was at fault for omitting or not seeing the various transactions that could influence the audit report. In the first case a significant amount of error has been tolerated and an error of 5% has been established. And although the controls were concluded as reliable by the audit assistant on the working papers, the 50 sales transaction could have caused the a significant change in the audit report(Saxena et al., 2010). However, she was appropriate in her conclusion that the controls in the organization were effective since it was a negligible error of just 5%.

In case number 2, the test on accounts payable was substantive. Balances of $100,000 were selected and vouched to be supporting vouchers. A significant amount of $ 2,565,650 was selected. It is a significant change in accounts payable account and would negatively misrepresent the audit report. An incorrect recording of $ 102,500 is of material nature and would affect true position of the company. A negligible error of only 4% would seem insignificant but in this case represents an amount of more than $ 206,000 which would constitute a substantial amount in accounts payable account. It is a material misstatement.  In conclusion the audit assistant was in this case wrong to get that error of that amount. she was inappropriate in her conclusion that the controls in the organization were effective.  



Anandarajan, A. and Kleinman, G. (n.d.). International auditing standards in the United States.

Anandarajan, A. and Kleinman, G. (n.d.). International auditing standards in the United States.

Audit Reports. (n.d.). .

Cosserat, G. and Rodda, N. (2009). Modern auditing. Chichester, UK: John Wiley & Sons.

Millichamp, A. (2002). Auditing. London: Continuum.

Porter, B., Simon, J. and Hatherly, D. (1996). Principles of external auditing. Chichester: J. Wiley.

Saxena, R., Srinivas, K., Rai, U. and Rai, S. (2010). Auditing. Mumbai [India]: Himalaya Pub. House.

Switzer, S. (2007). Internal audit reports post Sarbanes-Oxley. Hoboken, N.J.: John Wiley & Sons.

The assessment of inherent and control risks and its impact on substantive procedures. (1989). London: The Committee.

Weeks, C. and Butterworth, A. (2004). Measuring and auditing broiler welfare. Wallingford, Oxfordshire, UK: CABI Pub.

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