In casting totalling there are frauds which can b detected by performing casting. It is specified. InQ 24 Pg 1.30 in defalcation of cash (i) (4). It is not clear to me. InQ22 c Pg 1.26 in first para nothing is mentioned about the relationship with behavioral sciences. We have to include it or not. Q4pg 1.7 Statebriefly about audit procedures and audit techniques.In this question I am little confused that in audit procedures inquiry is included and in audit techniques also there is included. same is with casting etc.In this question first ICAI said how to do audit. Role of audit procedures in having audit.Very confusing situation. Please support Ravi Sir.
Below is the statement you were referring to in Question 24
Casting a larger totals for petty cash expenditure and adjusting the excess in the totals of the detailed columns so that cross totals show agreement.
In petty cash book you may have multiple coloumns such as wages / stationary / snacks / others and finally last total coloumn. So now in our example we have 5 coloumns 4 for different types of expenses and 5th total coloumn. Each of these 5 coloumns will have totals at the last. And if add totals of 4 cocloumn it will be equal to total of 5th cocloumn.
I hope you got the format of petty cash book, now suppose totals of these cocloumn is as follows
1. total of wages 5000
2. total of stationery 6000
3. total of snacks 7000
4. total of others 8000
5. total of total coloumn 26000
now cashier will inflate payments of 26000 to 28000 and then adjust 2000 by increasing wages from 5000 to 5500 snacks 7000 to 8000 and others 8000 to 8500.
This is how he will do fraud of 2000
The two terms, procedure and techniques, are often used interchangeably; in fact, however, a distinction does exist. Procedure may comprise a number of techniques and represents the broad frame of the manner of handling the audit work; techniques stand for the methods employed for carrying out the procedure. For example, procedure requires an examination of the documentary evidence. This job is performed by the procedure known as vouching which would involve techniques of inspection and checking computation of documentary evidence. Basically audit procedures are broadly of two types viz. compliance procedures and tests of detail.
Test of details are further comprised of substantive audit procedures and analytical review procedures. Vouching is a substantive audit procedure which involves audit techniques like casting, cross-casting, checking of posting, etc. On the other hand, verification of assets and liabilities is a substantive audit procedure which involves application of audit techniques like physical examination, confirmation from third parties, etc.
For collection and accumulation of audit evidence, certain methods and means are available and these are known as audit techniques. Some of the techniques commonly adopted by the auditors are the following:
(i) Posting checking
(ii) Casting checking
(iii) Physical examination and count
(vi) Year-end scrutiny
(viii) Tracing in subsequent period
(ix) Bank Reconciliation
Audit Procedure — Test of Controls & Substantive Procedures
Audit Techniques = Methods of Collecting Audit Evidence — SA 500 and they have added few more from Indian manual accounting point of view — a posting / totalling / bank reconciliation —- year end scrutiny and subsequent tracing
Combination of one or more techniques or methods is used to implement audit procedure.
Eg For Test of Controls we will do Inquiry / Observation / Reperformance etc
Operational Audit is part of ca final course , they included it by mistake in Ipcc. It simply includes improving day to day operations making them more economical / effective and efficient
For example —- in factory how to arrange machines so that movement to reduce labour and stock movement and save time and energy is part of operational audit