Auditing Revenue Account: Does Audit Sampling Replaced by Substantive Analytical Procedures Improve Audit Quality?

• In Event: Finding and Fixing Accounting Problems

Abstract

This paper describes the significance of substantive analytical procedures (SAPs) to realize business risks approaches and to deal with an extremely large population, particularly related to a revenue account. Recently, audit firms are more likely to focus on tests of details, such as audit sampling in tests of details, to avoid possible conflict with PCAOB inspections caused by moderate or weak SAPs. An examination of the existing literature suggests that audit sampling and SAPs are often complementary, even if SAPs do not offer high assurance. In some situations, either one could be more effective. Therefore, it presents that the auditor must consciously examine the factors affecting the effectiveness and efficiency of substantive tests and then decides the appropriate audit procedures to improve audit quality.

Author

• Kyunghee Yoon, Rutgers Business School