A summary of risk assessment procedures to be performed before a client is taken. A discussion of the need and use of engagement letters and documenting pre-engagement activities
Unit 3: Pre-
engagement
Scope of the audit
activities Audit must be conducted in accordance with ISA, IRBA
regulations and the terms of engagement letter
Reasonable assurance
The auditor gives a reasonable level of assurance for their audit opinion
The audit consists of inherent limitations due to testing, subjective tests and
use of judgement as well as audit evidence being persuasive rather than
conclusive
Responsibility for financials
Auditor must express opinion
Management must prepare as well as the financials present fairly in all material
aspects
Risk and materiality
Auditors must reduce material risk to an acceptably low level and conduct
audit procedures to gain audit evidence to determine risk
Audit and related services
Agreed upon
Audit Review Compilation
procedures
No assurance or
High but not total Moderate No assurance or opinion
assurance assurance opinion
Factual Identification of
+ Assurance - Assurance
findings compiled infor
, Audit Process
Auditing Historical financials aims to create opinion on the financials using audit procedures
to generate sufficient evidence to do so
1. 3 Party Relationship
A practitioner namely professional accountant
Responsible parties for relevant subject matter
Intended user
2. Subject Matter
- Information measured against criteria such as fin conditions and info as well
as non-fin info and conditions like physical and performance conditions
3. Suitable Criteria
Info against which subject matter will be assessed such as fin stats assessed
against assertions
4. Suitable and appropriate audit evidence
Auditor must obtain sufficient quantity and quality evidence from reliable
sources to develop opinion accounting for risks and materiality
Representations must be requested from management to confirm all relevant
info has been supplied and accurately
5. Written Assurance Report
Auditor should ensure that written opinion or report drafted
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