Ascertain and evaluate The Accounting Sys. Plan and record the audit plan Does the internal control And accounting systems Are reliable? Ascertain and evaluate The internal Control
Yes
Analytically review the Financial Statement for going concern & Materiality
No
Design and perform extensive Substantive Procedures
Audit Report
Standard
auditors report states that the financial statements present fairly in conformity with applicable standards:
Existence or occurrence Completeness Rights and obligations Valuation or allocation
Assets
All
All
assets are the rights of the entity and that all liabilities are obligations.
All
assets, liabilities, equity, revenues and expenses are fairly valued and allocated to the proper accounting period.
The
Financial
statements are the responsibility of management Auditors express opinion on financial statements Can obtain reasonable not absolute assurance of material misstatements Must exercise professional skepticism
9
Ethics-
system or code of conduct based on moral duties and obligations that indicates how we should behave.
AICPA Code of Professional Conduct 10 Generally Accepted Auditing Standards
Must follow the codes and standards to ensure that the auditing services will not lose their value and demand.
10
Must
have a broad based business knowledge to understand the risks, strategies, controls, business and industry of your client to understand if the financial statement assertions are valid.
11
Materiality Audit
risk Evidence
12
Is
the magnitude of an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced by the omission or misstatement.
13
Is
the risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated
14
Auditors
must obtain and evaluate evidence Then determine the relevance and reliability
Relevance- refers to whether the evidence relates
to the specific audit objective being tested. Reliability- refers to whether the evidence can be relied upon to signal the true state of the assertion of the auditor.
15
Auditors
use previous knowledge of commonly misstated items and industry knowledge to check certain transactions. Obtain a sample representative of the population of transactions. The larger the sample the less audit risk involved.
16