Auditors use procedures for ... ⁋⁋ - risk assessment
test of controls
evidence about management's assertions
Example Assertion:
I'm 58 years old ⁋⁋ - Two Assertions
1. Charlie is 58 years old => birth certificate
2. I am Charlie => ID & passport
Internal Control Audit...
Auditors use procedures for ... ⁋⁋ - risk assessment
test of controls
evidence about management's assertions
Example Assertion:
I'm 58 years old ⁋⁋ - Two Assertions
1. Charlie is 58 years old => birth certificate
2. I am Charlie => ID & passport
Internal Control Audit Plan ⁋⁋ - a plan that would contain a list of the specific procedures needed to
obtain an understanding of the client's internal control system and test that understanding for those
controls that relate to the relevant financial statement assertions
Substantive Audit Plan ⁋⁋ - document that contains a list of audit procedures for gathering evidence
related to the relevant assertions identified for the significant financial statement accounts and
disclosures on an audit client
*** nature, timing, and extent depend on risk assessment of client ***
8 Audit Procedures to Gather Audit Evidence ⁋⁋ - 1. Inspection of Records & Documents
2. Inspection of Tangible Assets
3. Observation
4. Inquiry
5. Confirmation
6. Recalculation
7. Reperformance
8. Analytical Procedures
, Inspection of Records & Documents ⁋⁋ - - documents prepared by independent outside parties
- documents prepared and processed by the client
- vouching (R<---F/S) (existence)
- tracing (R--->F/S) (completeness)
- scanning/ eyes open approach
Inspection of Tangible Assets ⁋⁋ - - complete evidence of existence
- tentative evidence of valuation
- no evidence of rights
Observation ⁋⁋ - view client's physical facilities and personnel on inspection tour
Inquiry ⁋⁋ - - collection of verbal evidence from independent parties and management
- written representations/ management representations
Confirmantion ⁋⁋ - - provide evidence of existence and rights/ obligational nd some times valuation
- requested from third party
Recalculation ⁋⁋ - - must always be mathematically accurate
- evidence of existence and valuation
Reperformance ⁋⁋ - - used during walk throughs
- verify process
Analytical Procedures ⁋⁋ - - allow auditors to evaluate financial information by studying relationships
among both financial and nonfinancial data
- assess conclusions reached during the audit and evaluate the overall presentation of the financial
statements
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