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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Audit procedures and obtaining evidence

Kestrel Logistics provides the auditor with an extract of its trade receivables ledger from the accounting system, which the auditor will import into audit software to recalculate ageing and select confirmation samples. Before relying on the extract, what should the auditor do FIRST?

The auditor should first establish that the extracted data is complete and accurate, typically by reconciling its totals to the general ledger control account. Without this, any ageing recalculation or sample selection built on the extract may rest on unreliable information.

  1. AObtain evidence that the extract is complete and accurate, for example by reconciling its totals to the general ledger control accountCorrect
  2. BSend confirmation requests to all customers in the extract
  3. CReduce the planned sample size because the data is in electronic form
  4. DConclude the data is reliable because it was generated by the client's own system

Explanation

Information used as audit evidence must be reliable, so the auditor tests the completeness and accuracy of the extract, such as by agreeing totals to the control account. Electronic format does not itself justify smaller samples, and client-generated data is not reliable merely because a system produced it.

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