Identify the Types of Substantive Procedures Used by the Auditor

question 79

Essay

Identify the types of substantive procedures used by the auditor to test accounts payable and accrued expenses. Provide an example of how the auditor may use each substantive procedure. Identify if any of the substantive procedures can be used as a test of controls or a dual-purpose test.

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Definitions:

Fixed Costs

Costs that do not change with the level of output or production, such as rent or salaries.

Average Fixed Costs

The total fixed costs of production divided by the number of units produced, showing how fixed costs per unit change with production levels.

Output Decreases

A reduction in the amount of goods or services produced by a company or economy over a specific period.

Total Variable Cost

The overall expenses that change in proportion to the level of production or business activity.