Intimidation threats Chapter 5: Download Audit Chapter Notes Chapter 1: Transaction not subject to ordinary process Risk of fraud: Assess the level of risk based on the understanding obtained: Judgement involved in determining account balances e.
Nature of business entity 5. Operation and legal structure; including knowledge Notes chapter 2 principles of auditing operations, tour of plants, legal documents, minutes and contracts and understanding of related parties 3. Management Representation letters Going Concern Basis Established the date of the auditors responsibility for knowledge of important events that should be reflected in the financial report, the auditor cannot provide an auditors opinion based on events that occurred after the auditors signature Subsequent events: Developing responses to assessed risk 5.
Accountants likely to require adjustment 2. Occurrence of unusual or complex transaction 6. Notes chapter 2 principles of auditing effectiveness of design of the policies or procedures in internal control Substantive tests: Time series analysis and modelling 5.
Omit test Dollar Unit Sampling: Review approval of and account coding for sales, including related party sales Occurrence: Select samples and match journal entries with review evidence that match to specific invoices Completeness: Review the evidence of control of accounting for numerical sequence of shipping and sales documents — Inspect evidence of clients reconciliations of shipments to invoices — Observe checking of shipments or inspect selected shipments Accuracy: Completeness and appropriateness test 3.
Understanding the entity and its environment 2. For each assertion within each significant transaction class, account balance or disclosure consider whether sufficient control risk evidence has been obtained to support the desired control risk 4. Segregation of duties 2. Recognise and manage risk 8.
Assignment of authority 7. Rights and obligations 3. Self review threats; firm will have to review their own work to form a judgement 3.
High dependence on Information technology Inherent risk at Assertion Level Fraud Fraudulent Financial Reporting Misappropriation of assets Earnings management Going Concern Bias Materiality Indicates the risk of material misstatement at the assertion level for classes of transactions, account balances and disclosures.
Internal control is designed to address business risk that threaten any of the businesses objectives Responsibility for internal control: In addition, the individual can not play a significant role for more than five out seven successive financial years, where the involvement is not in consecutive years Small regional firms can extend that to seven years with ASIC permission S the boards of listed companies required to provide a statement in annual report identifying all the non audit services provided by the audit firm, the fee for each anf explanation of why provision did not impair the independence Conflict of interest: Observe opening of mail and preparation of deposits — review the prelist forms for evidence that numerical sequence accounted for Accuracy: Test data techniques to verify that programmed controls are working Should be aware of the following types of irregularities that may occur in the expenditures 1.
Participation by those charged with governance 5. Classic disbursements fraud 2. The length of the subsequent events period will depend on the deadline, but it occurs until the audit report is signed Adjusting events: Information system, including the related business process relevant to financial reporting and communication 4.
Non financial performance measurement: The lower the tolerable misstatement, the larger the sample size This requires the person selecting the sample without influence or bias in the selection process, by using some sort of impartial selection information e.
Requires auditors to obtain appropriate representations from management, it puts it in writing formalised response to inquiries made by auditor during examination and also managements responsibility for design and implementation of internal control to prevent and detect errors and for presentation fair and accurate financial reports.
Reporting The expectation gap The difference between the expectation of auditors by users of financial reports and the role and responsibilities of auditors 1.
Lack of entity support 4. This is to ensure direct evidence of both controls and substantive matters 1. Design substantive tests to detect potential material misstatements Control risk is high; because the entities internal control policies are poor or do not support a less then high assessment, may be effective but audit tests to gather evidence are less effective or do not pertain to the particular assertion Chapter 9: Financial modelling Chapter 7: Monitoring of controls 1.
Valuation and allocation Cash Receipts and Payments transactions Sight supporting documents Sight remittance advice e. Professional competence and due care:Chapter 4 Auditing: Lesson 2 Legal Liability 1.
What is legal liability? Legal liability—the professional’s obligation under the law to provide a reasonable level of care while performing work for those he or she serves.
Non-GAAP Change Inadequate Disclosure Unjustified Departure from GAAP Unreasonable Accounting Estimate Withdraw False, Fraudulent, Deceptive or Misleading Becker Auditing – Edition Chapter 1 2 /5(5). Auditing Chapter 2 and 3 Chapter MC 2 - Q 65, 70(I) ) Which of the following categories of principles is most closely related to gathering audit evidence?
Auditing Chapter 2 Notes. STUDY. PLAY. AICPA. Order of authority: fundamental principles-->PCAOB auditing standards and ASB statements and Auditing Standards-->Interpretive Publications.
issued by the Auditing Standards Board of PCAOB, formally approved by SEC; quality guides to the audit that apply to all audits. Summary - chapter notes.
only reports on factual finding and therefore expresses no assurance Auditing definition breakdown Fundamental Principles underlying the objective of an audit Assertion Based assurance engagement: requires the auditor to issue an opinion in written assertion made by others, attest reporting engagement e.g.
the audit. View Notes - Notes on Chapter 2 in Auditing from SBU at Seton Hill University.
Threesetsofauditingstandards AICPA(AuditingStandardsBoard)fornonpubliccompaniesinUS. Notes on Chapter 2 in Auditing - AICPA(). Personal responsibilities of the auditor Auditor actions in .Download