SUMMARY AUDIT
SLIDES
The audit process
Risk assessment
Preliminary engagement activities accept engagement
Plan the audit audit strategy plan (materiality)
Risk assessment procedures identify RMM
o Business & fraud risks
o Internal control
o Financial statement level and assertion level
Audit program is based on audit risk assessment
If you detect a new, other risk adjust audit program
Risk response
Overall responses and further audit procedures update overall strategy
Implement responses to assessed RMM reduce audit risk
Reporting
Evaluate the audit evidence obtained
Auditors report (form an opinion) if there is no additional work required
Accept engagement
Firm’s values and goals leadership
o Ethics and independence
o Client acceptance and continuance
o Engagement performance
o Staff management
Documentation and ongoing monitoring
o Firm’s value control system and engagement files
pag. 1
, ISA objectives
To obtain reasonable assurance about whether financial statements as a whole are free from material
misstatement due to fraud or error
Express an opinion
To report in the financial statements
To enhance the degree of confidence of intended users in the financial statements
Financial statements give a true and fair view
High level of assurance
o Sufficient appropriate audit evidence to reduce audit risk to an acceptably low level
RMM exists at:
Overall financial statement level
The assertion level for classes of transactions, account balances and disclosures
Limitations of an audit
Nature of financial reporting
o Judgment by management
o Subjective decisions or assessments (estimates) by management
Nature of audit evidence available
o From audit procedures
o Previous audits
o Firm’s quality check procedures
o Accounting records
o Audit evidence prepared by an expert employed by the entity
Nature of audit procedures (will not detect every misstatement)
o Samples
o Management not providing complete info
o Will not detect info missing
Timeliness of financial reporting
o Relevance/value of financial info tends to diminish over time
o Form opinion within reasonable time and cost
pag. 2
SLIDES
The audit process
Risk assessment
Preliminary engagement activities accept engagement
Plan the audit audit strategy plan (materiality)
Risk assessment procedures identify RMM
o Business & fraud risks
o Internal control
o Financial statement level and assertion level
Audit program is based on audit risk assessment
If you detect a new, other risk adjust audit program
Risk response
Overall responses and further audit procedures update overall strategy
Implement responses to assessed RMM reduce audit risk
Reporting
Evaluate the audit evidence obtained
Auditors report (form an opinion) if there is no additional work required
Accept engagement
Firm’s values and goals leadership
o Ethics and independence
o Client acceptance and continuance
o Engagement performance
o Staff management
Documentation and ongoing monitoring
o Firm’s value control system and engagement files
pag. 1
, ISA objectives
To obtain reasonable assurance about whether financial statements as a whole are free from material
misstatement due to fraud or error
Express an opinion
To report in the financial statements
To enhance the degree of confidence of intended users in the financial statements
Financial statements give a true and fair view
High level of assurance
o Sufficient appropriate audit evidence to reduce audit risk to an acceptably low level
RMM exists at:
Overall financial statement level
The assertion level for classes of transactions, account balances and disclosures
Limitations of an audit
Nature of financial reporting
o Judgment by management
o Subjective decisions or assessments (estimates) by management
Nature of audit evidence available
o From audit procedures
o Previous audits
o Firm’s quality check procedures
o Accounting records
o Audit evidence prepared by an expert employed by the entity
Nature of audit procedures (will not detect every misstatement)
o Samples
o Management not providing complete info
o Will not detect info missing
Timeliness of financial reporting
o Relevance/value of financial info tends to diminish over time
o Form opinion within reasonable time and cost
pag. 2
