Ask Joey ™ a Question

What is NTE or nature, timing, and extent for audit procedures?

Nature, timing, and extent are all factors that should be considered when the audit team plans their procedures to gather evidence. Nature relates to the type of test that will be performed (observation, confirmation, reconciliation). Timing refers to when the test will be performed (interim or at year-end). Extent relates to the amount of testing that will be performed (10 samples or 30 samples).

An audit team will collectively refer to this assessment as NTE and it needs to be assessed for each audit area.      


You might also be interested in...

  • When can a PSC deduct payments made to owner-employees?

    The general rule is that personal service corporations (PSC’s) will be able to deduct owner-employee payments made in the same year that it is includible in their gross income for individual tax purposes. 

  • What do accountants mean when they say revenue can be recognized under the accrual basis of accounting?

    Under U.S. GAAP, which requires the use of accrual basis accounting, a company cannot recognize revenue until their performance obligation is satisfied. The visual below illustrates that key steps to revenue recognition:

  • What is the relationship between volume and variable cost per unit?

    If the variable cost per unit remains fixed, then any increase or decrease in unit volume will result in an increase or decrease in total variable costs for a business. For example, if variable cost per unit was steady at $5, then if unit volume were to increase from 100 to 200 units, then total […]