Auditoría FINAL TEORIA

Concept, Content, and NIF of Active Asset Rubrics

Active assets represent the resources owned by an entity from which future economic benefits are expected. These are categorized into various rubrics, each governed by specific Financial Reporting Standards (NIF) and containing distinct accounts.

Efectivo (Cash) refers to monetary resources immediately available to the entity for fulfilling obligations and performing operations. This rubric includes accounts like Caja (Cash on hand) and Bancos (Banks). It is governed by NIF C-1. For instance, a company might hold $20,000$ in Caja and $283,735$ in Bancos.

Cuentas por cobrar (Accounts Receivable) are rights enforceable by the entity to receive cash or other goods stemming from credit sales or similar operations. Typical accounts include Clientes (Customers), Documentos por cobrar (Notes Receivable), and Deudores diversos (Other Debtors). This category is governed by NIF C-3. A practical example would be a company presenting a balance in its Clientes account of $1,875,500$.

Pagos anticipados (Prepayments) represent amounts paid in advance for goods or services to be received in the future. These include Seguros pagados anticipadamente (Prepaid insurance), Rentas anticipadas (Prepaid rent), and Publicidad anticipada (Prepaid advertising). They fall under NIF C-5. An example is a company paying $12,000$ for an annual insurance policy that will provide coverage for the entire year.

Inventarios (Inventories) are goods owned by the entity intended for sale or for the production of goods that will be sold. Accounts include Materia prima (Raw materials), Producción en proceso (Work in progress), and Productos terminados (Finished goods), governed by NIF C-4. For example, a company might hold $500,000$ in its Finished Goods Warehouse.

Propiedad, planta y equipo (Property, Plant, and Equipment) consists of tangible assets used in the business operation with a useful life exceeding one year. Accounts include Terrenos (Land), edificios (buildings), maquinaria (machinery), Equipo de transporte (Transportation equipment), and Mobiliario y equipo (Furniture and equipment). This rubric is governed by NIF C-6. A company might record office furniture and equipment valued at $200,000$.

Cargos diferidos (Deferred Charges) are expenses that will generate economic benefits over multiple future periods. They are currently classified within other assets or amortizable expenses, specifically under Gastos de organización (Organization expenses). They are governed by NIF C-8 (Intangibles) according to the current classification. For instance, a company may present $150,000$ in organizational expenses.

Audit Objectives and Applied Examples for Assets

Each asset rubric maintains specific audit objectives to verify financial integrity. For Efectivo, the goal is to verify physical existence and immediate availability, ensuring it is correctly recorded in the books through cash counts (arqueo de caja) and bank reconciliations. In the case of Cuentas por cobrar, the objective is to prove the collection rights are real, recoverable, and correctly valued, often performed by sending selective confirmations of the $1,875,500$ balance to customers for debt recognition.

For Pagos anticipados, the auditor must verify that these represent future benefits and are being correctly amortized, such as recalculating the amortization of a $12,000$ insurance policy. Regarding Inventarios, the objective is to prove physical existence, ownership, and correct valuation, typically through the observation of a physical inventory valued at $500,000$. For Propiedad, planta y equipo, the goal is to verify the existence and ownership of assets and their valuation per NIF, often involving physical inspection of office furniture (e.g., recorded at $20,000$) and reviewing purchase invoices. For Cargos diferidos, the objective is to confirm they represent expenses with future benefits and are correctly amortized, which involves recalculating the amortization period for $150,000$ in organizational expenses.

Audit Risks by Asset Rubric

Audit risk consists of inherent risk, control risk, and detection risk. For Efectivo, there is a high inherent risk of theft or fraud due to the nature of money. Control risk arises from a lack of segregation of duties between those who receive, record, and deposit cash. Detection risk occurs if the auditor fails to perform cash counts or properly review bank reconciliations.

In Cuentas por cobrar, inherent risks involve fictitious sales or uncollectible accounts, while control risk stems from a failure to review balance aging or credit authorizations. Detection risk involves the auditor not confirming balances with clients or failing to analyze uncollectible accounts. Pagos anticipados carry the inherent risk of recording expenses as assets; control risk involves a lack of amortization controls, and detection risk involves failing to inspect contracts or calculations.

Inventarios face inherent risks of loss, theft, obsolescence, or overvaluation. Control risks involve deficiencies in warehouse controls or entry/exit records. Detection risk occurs if the auditor does not observe the physical inventory. Propiedad, planta y equipo carries risks of recording non-existent assets or incorrect valuations; control risks involve inadequate asset records, and detection risk relates to the auditor not physically inspecting assets or purchase documentation. Cargos diferidos carry the risk of capitalizing expenses that do not generate future benefits, requiring careful review of support documentation and amortization criteria.

Evaluation of Internal Control and Analytical Procedures

Internal control can be evaluated using three methods: the Questionnaire method (including specific questions about the rubric), the Graphic method (flowcharts such as Collection → Accounting → Deposit → Reconciliation), and the Descriptive method (narratives of processes). Key control attributes for Efectivo include custody and accounting registration. For Cuentas por cobrar, the focus is on authorization and credit follow-up. Pagos anticipados require monitoring of registration and amortization. Inventarios focus on entry and exit authorization. Propiedad, planta y equipo require accounting registration and physical custody. Cargos diferidos focus on the authorization of amortization to expenses.

Analytical procedures involve comparisons and financial ratios. For Efectivo, auditors compare cash levels with industry averages and analyze liquidity ratios (cash vs. short-term liabilities). For Cuentas por cobrar, auditors analyze collection periods and accounts receivable rotation (days sales outstanding). For Inventarios, inventory rotation and days in stock are analyzed. For Propiedad, planta y equipo, auditors relate depreciation to asset value and investigate unusual acquisitions or disposals. For Cargos diferidos, auditors relate the deferred balance to recorded amortization and investigate balances without proper amortization.

Substantive Tests and Audit Assertions

Substantive tests are performed to verify specific assertions. For Efectivo, the assertion is Real Existence, tested via cash counts and bank reconciliations compared to bank statements. For Cuentas por cobrar, the assertions are that accounts are Real and Recoverable, tested by sending customer confirmations. For Pagos anticipados, the auditor ensures the payment corresponds to Future Services by inspecting insurance policies and recalculating monthly amortization.

For Inventarios, assertions of Existence and Valuation are tested through physical observation and comparison with accounting records. For Propiedad, planta y equipo, physical existence and valuation are confirmed by inspecting assets, purchase invoices, and recalculating depreciation. For Cargos diferidos, the auditor proves future benefits by inspecting support documents and recalculating amortization.

External Confirmations: Types and Actions

External confirmation according to NIA 505 is audit evidence obtained from a third party. There are four types:

  1. Positiva: The third party confirms whether they agree or disagree with the balance (e.g., Customer says "Yes, the balance is correct"). This is reliable evidence.
  2. Negativa: The third party only responds if they disagree with the balance. If they do not respond, conformity is assumed. This is less reliable and used for non-material balances.
  3. Sin contestación (Non-response): The third party fails to respond (e.g., a Bank does not send a response). The auditor must apply supplementary procedures like checking subsequent events or reconciliations.
  4. En disconformidad (Disagreement): The third party responds with a different balance (e.g., Client indicates $70,000$ instead of $80,000$). The auditor must investigate the difference and apply additional tests.

Audit Documentation: C dulas and Electronic Records

C dulas de Auditor a (Audit Worksheets) are the material proof of the work performed, showing the depth of tests and the basis for the auditor's opinion. These serve as evidence of professional quality. While traditionally physical paper, there is an increasing trend toward electronic records. Electronic worksheets are equivalent in ownership, responsibility, and classification to paper ones. These documents are the property of the auditor, but their use is restricted by professional secrecy, requiring absolute discretion.

Worksheets are classified by use: a) Continuous (Permanent reference file) for information useful over several periods like the corporate charter or long-term contracts, and b) Temporal (Audit file) for information specific to one period like reconciliations or confirmations.

They are also classified by content:

  • Hoja de trabajo (Worksheet): Shows groups/rubrics of financial statements.
  • C dulas sumarias (Summary sheets): Show the general ledger accounts forming a rubric.
  • C dulas de detalle (Detail sheets): List the items making up a general ledger account.
  • C dulas anal ticas (Analytical/Verification sheets): Contain the work performed to verify the correctness of a specific operation.

Indexing, Cross-Referencing, and Audit Marks

To facilitate localization, worksheets use indices (alphanumeric, numeric, or alphabetical). In the standard alphanumeric system, simple letters indicate active accounts (A for Cash/Banks, B for AR, C for Inventory, U for Fixed Assets, W for Deferred Charges). Double letters are used for liabilities and equity (AA for Notes Payable, BB for Accounts Payable). Numbers are used for income statement accounts (10 for Sales, 20 for Cost of Sales, 30 for Expenses).

Indexing follows a pyramidal structure. For example, A is the Summary for Cash and Banks; A-1 is the Detail of Cash Funds; A-1-1 is the Physical Cash Count (Arqueo). Cross-referencing refers to linking common data between different sheets using the index (e.g., "See calculation in sheet U.2.1"). Audit Marks are standard symbols used to simplify documentation. Common marks include symbols for verified sums, figures checked against the ledger, physical verification performed, or document authorization verified. Specific examples include @ (compared against previous year audit) and C= (calculations correct).

International Standards on Auditing (NIA) and Procedures

NIA 315, 500, 501, 502, 505, and 230 provide the framework for audit procedures:

  • Conocimiento de la entidad (Knowing the entity): A dynamic process of gathering information for planning and professional judgment (NIA 315).
  • Reejecucin (Re-execution): Independent execution of procedures originally performed as part of internal control (NIA 500).
  • Inspeccin (Inspection): Examining records, documents, or physical assets (NIA 500).
  • Confirmacin externa (External confirmation): Written response from a third party (NIA 505/502).
  • Indagacin (Inquiry): Seeking financial/non-financial information from knowledgeable people (NIA 500).
  • Procedimientos anal ticos (Analytical procedures): Analysis of plausible relationships between financial and non-financial data (NIA 500).
  • Observacin (Observation): Watching a process performed by others, such as a physical inventory count (NIA 500).
  • Recalcular (Recalculate): Checking mathematical accuracy (NIA 500).

Specialized Guide: Physical Inventory Observation (NIA 501)

Historically, auditors did not physically verify inventories until the McKesson & Robbins fraud in $1938$, which mandated direct responsibility for existence. Following NIA 501, if inventories are material, the auditor must obtain evidence regarding existence and condition.

Procedures before the count include reviewing instructions, personnel training, and identifying obsolete mercury or third-party goods. Procedures during the count include observing the process, performing test counts, and documenting items (reference, description, location, quantity). Procedures after the count involve reconciling physical counts with book records, checking cut-off dates, and preparing a report for management. If the auditor cannot attend due to unforeseen circumstances, they must observe counts on an alternative date. If attendance is not feasible, alternate procedures like inspecting third-party documentation or performing physical inspections at third-party locations must be conducted.

Reliability of Evidence and External Confirmation (NIA 505)

Evidence reliability is higher when obtained from independent external sources, obtained directly by the auditor, and in documentary form (paper or electronic). Under NIA 505, the auditor must control the confirmation process, which includes determining information to be confirmed, selecting the confirming party, and designing and sending requests directly.

If the auditor doubts the reliability of a response (e.g., missing corporate email address), they must obtain additional evidence. If a positive confirmation is necessary (such as for Bank balances or financial obligations) and not received, alternative procedures may not suffice, potentially impacting the audit opinion. Negative confirmations are only used when the risk of material misstatement is low, the population consists of many small balances, a low disagreement rate is expected, and the auditor has no reason to believe the request will be disregarded.

Components of Internal Control (NIA 315)

According to NIA 315, internal control comprises five components that work together:

  1. El ambiente de control (Control environment): The entity's culture, integrity, ethics, and structure.
  2. El proceso de valoracin del riesgo (Risk assessment process): How the entity identifies and manages risks.
  3. El sistema de informacin y comunicacin (Information and communication system): Systems for capturing and communicating relevant data.
  4. Las actividades de control (Control activities): Policies and procedures to ensure management objectives are met.
  5. El proceso de seguimiento (Monitoring process): Ongoing monitoring of control effectiveness and corrective actions.