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Audit Procedures: Audit Procedures

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Audit Procedures Property If the risk assessment shows that the client has… An effective control environment: allows the auditor to have more confidence in internal control and reliability of au ... dit evidence overall response could include some audit procedures being performed at an interim date rather than at period end. An ineffective control environment (Deficiencies Exist) Require the auditor to perform additional work such as: Assigning more experienced staff Conducting audit procedures at year end rather than at interim dates Obtaining more extensive audit evidence from substantive procedures Making changes to the nature, timing, or extent of audit procedures to be performed. Financial Statement Assertions Assertions made by management, explicit or otherwise @July 10, 2022 9:07 PMAudit Procedures 2 Audit Procedures The means for obtaining sufficient audit evidence to satisfy financial statement assertions and support audit opinion on the fairness of the financial statements Detailed instructions for the collection of a particular type of evidence that is to be obtained during the audit Audit Procedures are performed to gather necessary, but not all, corroborative evidence to achieve audit objectives Audit Standards - measure of quality of audit performance, set by the AASC, remain the same from one engagement to another Audit Procedures - performed to meet audit standards; determined by the auditor → vary from audit to auditAudit Procedures 3 Audit Techniques - methods used by the auditor or the details of the audit procedures → also vary from audit to audit CATEGORIES OF AUDIT PROCEDURES 1. Risk Assessment Procedures → Evidence to support assessed risks 2. Overall Responses → to address assessed Risk of Material Misstatement at the FS level 3. Further audit procedures → evidence that will reduce audit risk to acceptably low level An Appropriate Audit Approach This will be based on the assessment of the identified risks at both the financial statement level and the assertion level.Audit Procedures 4 Note: in smaller entities, reliable control activities may not exist or may be very limited. In these cases, a primarily substantive approach may be the only alternative. NATURE, TIMING, EXTENT OF AUDIT PROCEDURES Nature refers to: its purpose (i.e. test of controls or substantive procedures) its type (i.e. inspection, observation, inquiry, confirmation, recalculation, reperformance, or analytical procedures) Timing when to perform the audit procedure period or date to which the audit evidence applies Extent quantity to be performed or the extent of testing number of items to be examined Audit Evidence Audit evidence consists of underlying accounting records and corroborating evidence UNDERLYING ACCOUNTING RECORDS [Show More]

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