Question1.3 You are currently auditing the interest expense account. Your procedures are to: (i) Select a sample of interest expense journals from the sub-ledger and vouch to the bank loan statements.(ii) Perform a reasonableness test for interest expense using the average cost of debt and average interest rates.(iii) Inspect the year end reconciliation of interest expense for the signature of the reviewer.What type of audit procedure does each of the above represent? (i) Substantive analytical procedure; (ii) Substantive test of detail; (iii) Substantive test of detail. (i) Substantive test of detail; (ii) Substantive test of detail; (iii) Test of Control. (i) Substantive test of detail; (ii) Substantive analytical procedure; (iii) Test of Control. (i) Substantive analytical procedure; (ii) Substantive analytical procedure; (iii) Test of Control. ResetMaximum marks: 1 Flag question undefined单项选择题
A
(i) Substantive analytical procedure; (ii) Substantive test of detail; (iii) Substantive test of detail.
B
(i) Substantive test of detail; (ii) Substantive test of detail; (iii) Test of Control.
C
(i) Substantive test of detail; (ii) Substantive analytical procedure; (iii) Test of Control.
D
(i) Substantive analytical procedure; (ii) Substantive analytical procedure; (iii) Test of Control.

Question

Question1.3 You are currently auditing the interest expense account. Your procedures are to: (i) Select a sample of interest expense journals from the sub-ledger and vouch to the bank loan statements.(ii) Perform a reasonableness test for interest expense using the average cost of debt and average interest rates.(iii) Inspect the year end reconciliation of interest expense for the signature of the reviewer.What type of audit procedure does each of the above represent? (i) Substantive analytical procedure; (ii) Substantive test of detail; (iii) Substantive test of detail. (i) Substantive test of detail; (ii) Substantive test of detail; (iii) Test of Control. (i) Substantive test of detail; (ii) Substantive analytical procedure; (iii) Test of Control. (i) Substantive analytical procedure; (ii) Substantive analytical procedure; (iii) Test of Control. ResetMaximum marks: 1 Flag question undefined单项选择题

A

(i) Substantive analytical procedure; (ii) Substantive test of detail; (iii) Substantive test of detail.

B

(i) Substantive test of detail; (ii) Substantive test of detail; (iii) Test of Control.

C

(i) Substantive test of detail; (ii) Substantive analytical procedure; (iii) Test of Control.

D

(i) Substantive analytical procedure; (ii) Substantive analytical procedure; (iii) Test of Control.

BlackTom AI · Accepted Answer

Vouching journal entries to external bank loan statements is a classic substantive test of detail because it verifies individual recorded transactions against external source documents.

1. Relevant knowledge points and concepts
- Substantive tests of detail: procedures that verify individual transactions, balances or disclosures (e.g., vouching invoices, confirmations).
- Substantive analytical procedures: evaluations of financial information through plausible relationships (ratios, trend or reasonableness tests) to identify anomalies.
- Tests of control: procedures to evaluate whether internal controls are designed and operating effectively (e.g., inspection for approvals, signatures).

2. Step‑by‑step reasoning for each procedure
(i) Select a sample of interest expense journals from the sub-ledger and vouch to the bank loan statements.
- Action: match recorded expense entries to external bank loan statements.
- Purpose: verify occurrence and accuracy of specific transactions.
- Classification: substantive test of detail.

(ii) Perform a reasonableness test for interest expense using the average cost of debt and average interest rates.
- Action: compute expected interest expense by applying average rates to average debt, compare to recorded expense.
- Purpose: detect material misstatement via analytic relationships rather than checking individual entries.
- Classification: substantive analytical procedure.

(iii) Inspect the year end reconciliation of interest expense for the signature of the reviewer.
- Action: inspect evidence of review/approval.
- Purpose: evaluate whether the control of review/authorization is in place and operating.
- Classification: test of control.

3. Intermediate steps (illustrative for (ii))
- Compute average debt, multiply by average interest rate to obtain expected interest.
- Compare expected interest to recorded amount; investigate significant differences.

4. Why the correct answer is correct
Each procedure aligns with the definitions above: vouching = detail test, reasonableness = analytical, signature inspection = control test.

5. Why other options are incorrect (brief)
- Options labeling (i) as analytical misclassify vouching of individual journals.
- Options labeling (ii) as a test of detail ignore that it uses aggregated relationships (analytical).
- Options treating (iii) as substantive detail miss that inspecting a signature tests control operation.

6. Conclusion
Therefore the correct classification is: (i) Substantive test of detail; (ii) Substantive analytical procedure; (iii) Test of Control — which matches the provided answer.