Audit Exam #3

Key assertions for purchasing cycle

- Accounts payable o Existences o Rights or Obligations o Completeness o Accuracy, valuation, allocation (Cost vs. NRV) o Classification - Various Expense Accounts o Occurrence o Completeness o Accuracy o Cutoff o Classification

Management Assertion

- An assertion is a statement or representation, explicit or implied, made by management regarding the recognition, measurement, presentation, and disclosure of items included in the financial statements and notes.

What are analytical procedures?

- Analytical procedures are an evaluation of financial information by studying plausible relationships among both financial and nonfinancial data. - During risk assessment, analytical procedures are required and are used to identify accounts at risk of material misstatement. This aids in planning the audit.

What is appropriate audit evidence?

- Appropriate refers to the quality of audit evidence gathered. - The concepts of quantity and quality are interrelated, as the quality of evidence gathered will affect the quantity required. - Typically, as the quality of evidence increases, the need for additional evidence decreases.

Substantive analytical procedures for assertions in the revenue process:

- Auditors can use analytical procedures as a substantive procedure to gather evidence in support of assertions related to account balances or transactions. - If based on reliable data, and the analytical model is predictive, this gives more assurance, and less testing and of details is required

When would an auditor NOT use a negative confirmation?

- Auditors should not use negative confirmations as the sole audit procedure unless all of the following conditions are present: o Auditors have assessed the risk of material misstatement for accounts receivable as low. o Auditors have gathered sufficient appropriate evidence that internal controls are effective. o The population of accounts receivable balances consists of a large number of small account balances. o Auditors expect a low exception rate. o Auditors are not aware of any circumstances that would cause the recipients to disregard the confirmation request.

Bill-and-hold transactions

- Bill-and-hold transactions are transactions in which a company bills customers (recognizes revenue) without shipping goods - Problems associated with booking consignment sales, refund rights, and bill-and-hold transactions usually result in problems associated with the occurrence of revenues and the existence of receivables.

Understanding the cash account balance:

- Cash and cash equivalents include: o Cash in the bank - an example is the primary bank account for the company. o Imprest bank accounts - an example is an imprest payroll bank account. These are bank accounts that will have a specific book balance, such as zero or $10,000. At each payroll date, the exact amount needed to clear net payroll transactions is transferred into this account. After payroll disbursements are made, the balance in the account reverts to the specific expected balance. o Cash equivalents - examples are commercial paper, Treasury bills, and money market funds. These are highly liquid investments having a maturity of three months or less. These accounts usually result in the recognition of interest income.

Inherent risk of the cash account

- Cash, by its nature, is susceptible to theft. - Many schemes for stealing cash involve failing to record cash receipts. In contrast to receivables or inventories, inherent risks pertaining to the rights and obligations or the accuracy, valuation and allocation assertions for cash are low because there are no complexities involving rights, accounting measurements, and estimates

analytical procedures (cash account)

- Compare cash balances with budgeted amounts, prior year's balances, or other expected amounts. - Calculate cash as a percent of total assets and compare with auditor expectations.

Exceptions in AR confirmations

- Confirmation responses will inevitably contain some exceptions. - Exceptions may be attributed to goods in transit from the client to customers, returned goods, payments in transit from customers to the client, items in dispute, errors, and irregularities. All exceptions should be investigated by the auditor and their resolution indicated in the auditor's documentation

Tests of details of balances

- Confirming accounts payable - Reconciling unconfirmed payables to monthly statements received by the client from vendors

How does Understanding how the entity earns and recognizes revenues assist the auditor?

- Developing an expectation of total revenues. - Developing an expectation of gross margin - Developing an expectation of net receivables .

Step 5 of auditing Purchasing Cycle

- Document the Results of the Audit Test

Step 2 of auditing purchase cycle

- Evaluate the internal controls and determine a preliminary audit strategy

Explain the Assertions About Account Balances and Related Disclosures: (Balance sheet)

- Existence: Assets, liabilities, and equity interests exist. - Rights and obligations: The entity holds or controls the rights to assets, and liabilities are the obligations of the entity. - Completeness: All assets, liabilities, and equity interests that should have been recorded have been recorded, and all related disclosures that should have been included in the financial statements have been included. - Accuracy, valuation, and allocation: Assets, liabilities, and equity interests have been included in the financial statements at appropriate amounts, and any resulting valuation or allocation adjustments have been appropriately recorded, and related disclosures have been appropriately measured and described. - Classification: Assets, liabilities, and equity interests have been recorded in the proper accounts. - Presentation: Assets, liabilities, and equity interests are appropriately aggregated or disaggregated and clearly described, and related disclosures are relevant and understandable in the context of the requirements of the applicable financial reporting framework.

What is a confirmation?

- External confirmation is a procedure in which the auditor corresponds directly with a third party, either in paper or electronic form. The third party is asked to respond directly to the auditor, not to the client, on the matter(s) included in the confirmation. - Evidence obtained from external confirmations is considered reliable because it is obtained from an independent source outside of the client. External confirmations can be sent to any third parties the auditors deem necessary, but the most common confirmations are with the client's bank and customers

What could go wrong for revenue process?

- If revenue is recognized prematurely, both sales and accounts receivable will be overstated. - The same interaction also exists between cash receipt transactions and accounts receivable, and a misstatement of cash receipts will result in a misstatement of accounts receivable.

Steps in the procurement process

- Includes o Selecting and approving vendors o Establishing payment terms o Negotiating contracts o Purchasing goods o Receiving goods o Recording purchases and payment of liabilities

Business process for a purchase:

- Initiating and Authorizing Purchases - Controls over an Authorized Vendor List - Requisition Goods and Services - Preparing Purchase Orders - Preparing a Receiving Report - Recording Purchases - Cash disbursements: approving and recording SEGREGATION OF DUTIES CRITICAL

Gross Sales

- Many companies, particularly growth companies, pay considerable attention to top-line revenues. - Companies may award bonuses based on gross revenues, and companies have been valued based on multiples of revenues.

Why would auditors test controls in the revenue process?

- Most auditors plan to test controls in the revenue process because of the high volume of routine transactions in this process. - Public company auditors test controls to support an opinion on internal control. - Auditors of private companies test controls that appear to be effective because of the audit efficiencies that exist when the client has effective controls in place.

Internal controls over the cash account

- Most perform bank reconciliations monthly. However, the effectiveness of bank reconciliation controls depends on the adequacy of the segregation of duties. - The person performing the bank reconciliation should have no responsibilities for receiving or disbursing cash. - In companies with good segregation of duties, bank reconciliation controls will be tested at an interim date. If duties in a smaller organization are not adequately segregated, then the auditor will follow a primarily substantive approach.

Confirming Accounts payable for the purchase cycle

- OPTIONAL o Confirmation offers no assurance that unrecorded payables will be discovered External evidence in the form of invoices and vendor monthly statements should be available to substantiate the balances

Explain Each Assertion About Classes of Transactions and Events and Related Disclosures: (Income statement)

- Occurrence: Transactions and events that have been recorded or disclosed have occurred, and such transactions and events pertain to the entity. - Completeness: All transactions and events that should have been recorded have been recorded, and all related disclosures that should have been included in the financial statements have been included. - Accuracy: Amounts and other data relating to recorded transactions and events have been recorded appropriately, and related disclosures have been appropriately measured and described. - Cutoff: Transactions and events have been recorded in the correct accounting period. - Classification: Transactions and events have been recorded in the proper accounts. - Presentation: Transactions and events are appropriately aggregated or disaggregated and clearly described, and related disclosures are relevant and understandable in the context of the requirements of the applicable financial reporting framework.

Drawing a final conclusion (AR)

- Once the auditor has analyzed data from the procedures performed to test accounts receivable, the auditor needs to determine the following: o The root cause of the misstatements. o The magnitude of the misstatements relative to the account balance and its effect on the income statement.

Forms and examples of each form of audit evidence:

- Oral information: auditor posing questions to client or external personnel. Answers are considered audit evidence. - Visual information: observation - Paper documents: transactions that are documented - Electronic Information: electronic documents

When to not do a confirmation of AR

- Professional standards state there is a presumption that the auditor will request the confirmation of receivables during an audit unless: o Accounts receivable are immaterial to the financial statements. o The use of confirmations would be ineffective as an audit procedure. o The auditor's assessed level of risk of material misstatement at the relevant assertion level is low, and the other planned substantive procedures address the assessed risk.

Name and define the source documents in the purchasing process:

- Purchase requisition. A written request for goods or services by an authorized individual or department. - Approved vendor master file. An electronic file containing pertinent information on vendors and suppliers that have been approved to purchase services from, and make payments to. - Purchase order. A written offer from the purchasing department to a vendor or supplier to purchase goods or services specified in the order. - Receiving report. A report prepared on the receipt of goods showing the kinds and quantities of goods received from vendors. - Vendor invoice. The bill from the vendor that states the number of items shipped or services rendered, the amount due, the payment terms, and the date billed.

What is recalculation?

- Recalculation is the audit procedure of checking the mathematical accuracy of documents or records. - some are simple, some are more complex

When to recognize a purchase

- Record upon the receipt of goods o understatement of AP and expense until vendor invoices is received - Early payment discounts are record when payment is made - Auditor should obtain sufficient appropriate evidence for each assertion related to the purchasing process: o the transaction classes o balances o disclosures

Refund Sales:

- Refund rights occur when a sale is made with the right to return the goods for a full refund, even if the goods are not defective. - When rights of return exist or are likely to be accepted, a reasonable estimate of refunds should be made when revenue is recognized. - In determining the amount of the estimated refunds, management should consider competition, obsolescence, and the length of time over which the product can be returned. - However, if a reasonable estimate cannot be made, revenue should not be recognized until the material uncertainty is resolved. - Further, if a seller changes the right of return near the end of the period to offer more generous terms, the seller should not be able to recognize revenue until material uncertainties are resolved and subsequent cash collections are assured.

What determines the reliability of audit evidence?

- Reliability refers to the nature and source of the audit evidence and how it was obtained

What are some trends to evaluate? just name a few

- Revenue per number of manufacturing employee labor hours, for a labor-intensive manufacturing process. - Revenue to plant assets in a capital-intensive manufacturing process. - Revenue per square foot of retail space for a grocer. - Revenue compared to occupancy rates for industries such as hotels and airlines. - Revenue per student for a college.

Performing cutoff tests for sales and sales returns

- Sales should be recorded in the period in which legal title to the goods passes to the buyer. o When goods are shipped from inventory FOB (free on board) shipping point, title passes on the date of shipment. o When the terms of sale are FOB destination, title does not pass until the buyer receives the goods.

Other analytical procedures to assess

- Sales turnover, a ratio of sales to average total assets. - Trends in gross margins compared with trends in market share. - Estimates of accounts receivables given knowledge of the company's sales volumes, prices, and historical collection period. - Comparison of accounts receivables to the receivables estimate in the company's cash budgets. - Uncollectible accounts expense to net credit sales. - Uncollectible accounts expense to actual uncollectible accounts written off.

What is scanning?

- Scanning is a type of analytical procedure in which auditors use their professional judgment to review accounting data in order to identify unusual or significant items that may be an indication of a material misstatement.

What is sufficient audit evidence?

- Sufficient refers to the quantity of audit evidence gathered. - Essentially, they use their professional judgment to determine at what point they have gathered enough evidence to support their opinion on the fair presentation of the financial statements.

Step 3 of auditing purchase cycle

- Test internal controls to determine the internal control effectiveness: Test controls and assess fraud risk

Substantive procedures for cash and cash equivalents

- Tests of cash balances focus on the account balance assertions of existence, completeness, and accuracy, valuation and allocation. - Initial, analytical, Test of details of transactions, draw conclusion

Preliminary audit strategy (purchasing cycle)

- The auditor must evaluate whether internal controls are effective or ineffective - Once the auditor has identified key controls, the auditor is able to determine a preliminary audit strategy. - The auditor will usually plan to perform tests of controls if internal controls appear to be effective.

What is reperformance?

- The auditors will "re-do" a procedure that was performed by the client to determine if the auditors get the same result. - Reperformance is commonly used as a test of controls.

Performing cash receipts cutoff tests

- The cash receipts cutoff test is designed to obtain reasonable assurance that cash receipts are recorded in the accounting period in which they are received. - The objective of this procedure is to determine that the deposit slip total agrees with the receipts shown on the daily cash summary, and that individual cash receipts are properly allocated to each customer in the correct time period.

Assessing fraud and control risk in the cash account

- The most important control over the existence, completeness, accuracy and valuation of cash balances is independent bank reconciliation. - If control risk is high or maximum, the auditor should assume that fraud risk is high and design appropriate substantive procedures, particularly tests of transactions.

Summary and evaluation of results of confirmation of AR

- The summary should provide data on: o The number and dollar value of confirmations sent and responses received. o The proportion of the population total covered by the sample. o The relationship between the audited and book values of items included in the sample.

Vouching revenue transactions

- To test revenue transactions, the auditor will select a sample of sales invoices to vouch to the supporting source documents to provide evidence pertaining to the occurrence, accuracy, classification, and cutoff assertions.

Tracing revenue transactions

- To test the completeness assertion, the auditor should trace a sample of sales, cash receipts, and sales adjustment transactions to their recording in the accounting records. o For sales, the auditor should start with a sample of shipping documents and trace transactions to the sales journal. o For cash receipts, the auditor would sample items from the prelist of cash and trace them forward to the cash receipts journal. o For sales returns, the auditor would normally start with the sale returns authorization and trace forward to the receiving report and the entry in accounting records. The completeness of sales returns may be a particular concern if management has incentives to overstate revenues and internal controls over sales returns are weak

What are the initial substantive procedures

- Trace: Trace beginning balance for accounts payable to prior year's working papers. - Scan: Scan activity in the general ledger account for accounts payable and investigate entries that appear unusual in amount or source. - Obtain: Obtain the accounts payable subsidiary ledger and determine that it accurately represents the underlying accounting records by footing the subsidiary ledgers and comparing the total to the general ledger balance.

Step 1 in auditing purchasing cycle:

- Understanding the entity and its environment, performing analytical procedures, and assessing inherent risk

Reconciling Unconfirmed Payables to Vendor Statements

- Vendors provide monthly statements. - The auditor can reconcile the vendor statements to the client's listing of payables. - The evidence from this procedure applies to the same assertions as confirmations but is less reliable because the vendors' statements were sent to the client rather than directly to the auditor.

Tests of details of transactions

- Vouch Recorded Payables to Supporting Documentation - Perform Cutoff Procedures - Perform Search for Unrecorded Liabilities

Vouching vs. Tracing?

- Vouching is a type of inspection in which auditors select transactions from a journal or ledger and work backward to examine the underlying source documents. - Vouching provides evidence for the occurrence or existence assertion. - Tracing is a type of inspection in which auditors select source documents and work forward to follow the transaction through to recording in the journal and ledger. - Tracing provides evidence for the completeness assertion.

Timing and extent of AR confirmation

- When the level of detection risk is low, the auditor ordinarily requests confirmation of receivables as of the balance sheet date. - If the risk of material misstatement is low, the auditor is willing to accept a higher level of detection risk, and the confirmation date may be one or two months earlier.

Determining final audit strategy (cash account)

- assess control risk and fraud risk. - Fraud risk is increased when control risk is high. - The auditor then determines RMM and develops a final audit strategy.

The applicability of confirmations to assertions (AR)

- existence assertion for accounts receivable. - rights and obligations assertion. - accuracy, valuation, and allocation assertion for gross accounts receivables.

Tests of details of transactions

- tests of transactions involving the tracing and vouching of cash receipts and cash disbursements transactions o Testing Cutoff. o Auditing Bank Transfers

Audit steps for the Acquisition and Expenditure cycle

1. Understanding the entity and its environment, performing analytical procedures, and assessing inherent risk 2. Understand the internal controls and determine a preliminary audit strategy 3. Test internal controls to determine the effectiveness 4. Perform the substantive procedures 5. Document the results of the test

What are the 5 steps to auditing revenue

1. to understand the nature of the entity's revenue process 2. to understand internal controls and determine a preliminary audit strategy. 3. identify potential tests of controls that may be used to determine if a client's controls in the revenue process are effective. 4. evaluate inherent risks, evaluate and test the system of internal control in the revenue process, and develop an audit strategy. 5. draw a final conclusion

Common ratios used for analytical procedures in auditing procurement

AP turnover in days, COGS to average AP, payables as a % of total assets, Current Ratio.

Common transaction process for purchasing

Authorizing purchases. Receiving goods. Recording purchases.

What are consignment sales

Consignment sales are a trade agreement in which one party (the consignor) provides goods to another party (the consignee) to sell. However, the consignee has the right to return unsold goods back to the consigner. In other words, a consignment sale is an agreement in which a third party is entrusted with selling goods on behalf of the owner..

Substantive analytical procedures (procurement)

Develop expectations, calculate ratios, analyze ratios relative to expectations based on prior years, industry data, budgeted amounts, or other data.

What are the Assertions About Account Balances and Related Disclosures? (Balance sheet)

Existence, Rights and Obligations, Completeness, Accuracy Valuation and allocation, Classification, Presentation

Audit strategies for the existence assertion (cash)

Inherent Risk = High Control Risk = Low Setting Detection Risk: Risk that analytical procedures ineffective = high Risk that TOD ineffective = high Detection Risk = LOW

Audit strategy, accuracy valuation and allocation (cash)

Inherent Risk = Low Control Risk = Low risk that analytical procedures fail = high risk that TOD will fail = high Detection risk = Medium?

Audit strategies for completeness assertion (cash)

Inherent Risk = Moderate Control Risk = Low risk that analytical procedures ineffective = High risk that TOD ineffective = High Detection Risk = medium low

What are the Assertions About Classes of Transactions and Events and Related Disclosures? (Income Statement)

Occurrence, Completion, Accuracy, Cutoff, Classification, Presentation

What are relevant assertions:

Relevant assertions are assertions that have a reasonable possibility of containing a material misstatement that would cause the financial statements to be materially misstated and, therefore, have a meaningful impact on whether the account is fairly stated

How to gather audit evidence? - 3 categories

Using Audit Procedures: o Risk assessment procedures - methods used to gain an understanding of a client and its industry for the purpose of identifying risk of material misstatement. o Tests of controls - methods used to determine the operating effectiveness of the client's controls in preventing, or detecting and correcting, material misstatements at the assertion level. o Substantive procedures - methods designed to detect material misstatements at the assertion level.

Recording documents in the purchase process

Voucher and purchases journal

How do auditors use management assertions during the risk assessment phase?

auditors use management assertions as a guide when determining the different types of potential material misstatements that could occur or what can go wrong in the financial statements.

Traditional controls for recording sales and receivables should determine that:

o All shipments result in a sales invoice. o All sales invoices are matched one-for-one with a shipment. o The sales invoice is accurate compared to goods actually shipped. o The sales invoice is recorded in the same time period in which goods are shipped. o If sales of services are included, they are properly valued and classified when recording the transaction.

Key controls and assertions for purchasing cycle

o Completeness of purchases. A report is generated and reviewed daily, reporting any goods received that have not resulted in a recorded voucher. o Occurrence of purchases. A report is generated and reviewed daily of any purchases not supported by documentation of receiving goods. o Accuracy of Purchases. A report is generated and reviewed daily of any prices or quantities on the voucher that are not supported by underlying documents or files. o Purchases Cutoff. A report is generated and reviewed daily of any vouchers not recorded in the same accounting period as the receiving report. o Classification of Expenses and Payables. A report is generated and reviewed daily of any vouchers showing incorrect account coding.

Dealing with Nonresponses

o Examining subsequent collections. o Vouching open invoices comprising customer balances. If a customer has not paid a receivable, the auditor can vouch the receivable to the underlying customer order and shipping documentation to provide evidence that the receivable exists.

Name some procurement fraud risks:

o Fictitious vendors - employee creates false vendors and invoices in order to direct payments to themselves o Kickbacks - illegal payment intended to compensate for preferential treatment o Bid rigging - a form of collusion in which bidders on a contract decide who should be successful in the tender, and then draft their bids accordingly. o Personal purchases

What are the normal classes of transactions in the revenue process?

o Making credit sales. o Collecting cash receipts (collection of receivables and cash sales). o Recording sales adjustments (discounts, sales returns and allowances, and adjustments for bad debts).

stuff about the entity's environment that affects the cash account:

o Management's cash budgeting practices. o The influence of seasonal activity on cash balances. o The level of minimum cash balances the company expects to keep on hand. o The company's policies regarding the investment of excess cash in cash equivalents or long-term investments.

Persuasive Audit Evidence:

o Persuasive means the evidence obtained is both sufficient and appropriate for the auditor to draw reasonable conclusions

Inherent risks for purchasing cycle

o Pressure to understate expenses o Pressure to understate payables

Classes of transactions for purchasing process

o Purchasing goods and services (purchasing on credit). o Making payments (cash disbursement transactions). o Recording purchase adjustments.

tests of details of balances

o Sending a bank confirmation and o Testing the client's bank reconciliation. o Proof of Cash. When fraud risk is high, the auditor might consider performing a proof of cash.

What factors affect the reliability of information to be used as audit evidence?

o Source: In general, reliability increases when the information is: obtained from sources external to the entity or by direct auditor knowledge documented, and created in an environment with effective internal controls. Information that comes from an external source or directly from the auditor is less susceptible to management bias and manipulation o Accuracy and Completeness: To determine if internally generated information is accurate and complete, auditors must first test the controls over the preparation and maintenance of the information. o Authenticity o Susceptibility to Management Bias: Information that has a higher risk of being susceptible to management bias may be less reliable than information that has a lower risk of management bias.

- If the client relies on IT controls and the auditor plans to assess control risk as low for revenue process assertions, the auditor will usually:

o Test the effectiveness of IT general controls. o Use generalized audit software to evaluate the effectiveness of IT application controls. o Test the effectiveness of manual procedures to follow up on exceptions identified by IT application controls.

What the auditor should understand about Control activities in the purchasing process

o The potential for duplicate payments. o failure to accrue expenses and payables due to cutoff problems.

In order to draw a final conclusion about the purchasing cycle, the auditor needs to determine:

o The root cause of any misstatements. It is important to understand what caused any misstatements detected by the auditor. o The magnitude of the misstatements, relative to the account balance, and their effect on the income statement. The auditor will normally compare a misstatement to the tolerable misstatement level determined in planning the audit.

draw a final conclusion(cash)

o The root cause of the misstatements. It is important to understand what caused any misstatements detected by the auditor. o The magnitude of the misstatements, relative to the account balance, and their effect on the income statement. The auditor will normally compare the misstatement to tolerable misstatement determined in planning the audit.

- Other factors that contribute to misstatements in the revenue process include the following.

o The volume of sales, cash receipts, and sales adjustment transactions is often high, resulting in numerous opportunities for errors to occur. o The timing and amount of revenue to be recognized (occurrence and cutoff of revenues) may be contentious owing to factors such as complex accounting standards, the need to make estimates, the complexity of the calculations involved, and purchasers' rights of return. o When receivables are factored with recourse, the classification of the transaction as a sale may be incorrect.

Initial procedure (cash account)

o Trace beginning balance for cash on hand and in bank to the prior year's working papers. o Scan activity in general ledger accounts for cash and investigate entries that appear unusual in amount or source. o Obtain client-prepared schedules of bank balances, recalculate to verify mathematical accuracy, and determine agreement with general ledger.

- When planning the audit of cash, it is important for the auditor to:

o Understand the account balance. o Understand the entity and its environment. o Evaluate the results of analytical procedures performed during planning.

What are Initial substantive procedures for relevant assertions in the revenue process?

o Verifying that the beginning balances for accounts receivable and the allowance for doubtful accounts agree with the ending balance in the prior year's working papers. o Scanning the activity in the current period's accounts receivable and allowance for doubtful accounts for significant entries of an unusual nature or amount that may require special investigation. o Obtaining a listing of accounts receivable in digital form. Use generalized audit software to foot the electronic file and agree to the general ledger. This file can then be used for further substantive procedures.

Evaluating allowance for doubtful accounts

o foot and crossfoot the aged trial balance of accounts receivable and agreeing the total to the general ledger balance. o Testing the accuracy of the client's aging by vouching to underlying sales invoices and shipping documents. o Considering evidence concerning the collectibility of past-due amounts o Identifying customers with past-due balances and calculating credit histories for customers with past-due balances. o Evaluating prior estimates of uncollectible accounts with subsequent experience and the benefit of hindsight. o Using the evidence obtained above to assess the reasonableness of the percentages used to compute the allowance component required for each aging category and the adequacy of the overall allowance.

Three classes of Management Assertions:

o transactions and events o account balances at the period-end o presentation and disclosure

Steps in performing analytical procedures:

obtaining an understanding of total revenues given (1) the client's capacity (2) the client's marketplace for those products. - Auditors should be sensitive to the volume of sales that an entity records given its maximum capacity, the number of shifts that an entity operates, and seasonal variations in the industry.

Step 4 of auditing procurement process

perform substantive procedures