6) Planning & Risk Assessment

Description

Mind Map on 6) Planning & Risk Assessment, created by littlepaz_2001 on 19/09/2013.
littlepaz_2001
Mind Map by littlepaz_2001, updated more than 1 year ago
littlepaz_2001
Created by littlepaz_2001 almost 11 years ago
287
3

Resource summary

6) Planning & Risk Assessment
  1. ISA 200: Overall objectives of the independent auditor & the conduct of an audit in accordance with international standards on auditing.
    1. To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error.
      1. To report on the financial statements, and communicate as required by the ISA's, in accordance with the auditor's findings.
        1. Key requirements for the auditor to obtain reasonable assurance and to express an opinion are:-
          1. ETHICS:- Comply with relevant ethical requirements
            1. PROFESSIONAL SKEPTICISM:- Exercise professional judgement in planning & performing an audit
              1. SUFFICIENT APPROPRIATE AUDIT EVIDENCE & AUDIT RISK:- Obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level.
            2. ISA 300: Planning an audit of financial statements
              1. Objective is to plan the audit so that it will be performed in an effective manner
                1. OVERALL AUDIT STRATEGY
                  1. Characteristics of the engagement
                    1. Reporting objectives, timing of the audit and nature of communications
                      1. Significant factors, preliminary engagement activities & knowledge gained on other engagements
                        1. Nature, timing & extent of resources
                        2. AUDIT PLAN
                          1. Specific procedures to be carried out to implement the strategy and complete the audit
                        3. ISA 315: Identifying & assessing the risks of material misstatement through understanding the entity & its environement
                          1. Understand the entity in order to.....
                            1. Identify & assess risks of material misstatement
                              1. Design & perform audit procedures
                                1. Provide a frame of reference for judgements
                                  1. WHAT do we need to get an understanding of?
                                    1. Industry, regulatory & other external factors
                                      1. Nature of the entity
                                        1. Selection, application & reasons for changes of accounting policies
                                          1. 1) Identify Risks
                                            1. 2) Assess whether the identified risks relate more pervasively to the financial statements as a whole
                                              1. 3) Relate the risks to what can go wrong at the assertion level
                                                1. 4) Consider whether the risks are of a magnitude that could result in a material misstatement
                                              2. Some risks identified may be SIGNIFICANT risks
                                                1. Risk of fraud
                                                  1. The degree of SUBJECTIVITY in the financial statements
                                                    1. Unusual transactions
                                                      1. Significant transactions with a related party
                                                        1. COMPLEXITY of the transactions
                                                    2. Objectives, strategies & related business risks
                                                      1. Measurement & review of the entity's financial performance
                                                        1. Internal Control
                                                          1. HOW do we get this understanding?
                                                            1. Inquiries of management
                                                              1. Analytical procedures
                                                                1. Observation & inspection
                                                                  1. Audit team discussion of the susceptibility of the financial statements to material misstatement
                                                                    1. Prior period knowledge
                                                              2. ISA 330 The auditor's responses to assessed risks
                                                                1. Objective of the auditor is to 'obtain sufficient appropriate audit evidence re the assessed risks of material misstatement, through designing & implementing appropriate responses to these risks
                                                                  1. Overall responses
                                                                    1. Emphasising to the audit team the need for professional skepticism
                                                                      1. Assigning additional/ alternative staff to the audit
                                                                        1. Using experts
                                                                          1. Providing more supervision on the audit
                                                                            1. Incorporating more unpredictability into the audit
                                                                            2. The evaluation of the control environment will help the auditor determine whether they are going to take a SUBSTANTIVE approach or a COMBINED approach
                                                                              1. Further audit procedures designed to address the assessed risks
                                                                                1. MUST carry out substantive procedures on material items and also :-
                                                                                  1. Agreeing the financial statements to the underlying accounting records
                                                                                    1. Examining material journal entries
                                                                                      1. Examining other adjustments made in preparing the financial statements
                                                                                  Show full summary Hide full summary

                                                                                  Similar

                                                                                  Hitler's Rise to Power
                                                                                  hanalou
                                                                                  Resumo para o exame nacional - Fernando Pessoa Ortónimo, Alberto Caeiro , Ricardo Reis e Álvaro Campos
                                                                                  miminoma
                                                                                  B7: Further Biology
                                                                                  Matthew Law
                                                                                  AS Biology- OCR- Module 1 Cells Specification Analysis and Notes
                                                                                  Laura Perry
                                                                                  A-level Psychology Key Terms & Definitions
                                                                                  Andrea Leyden
                                                                                  GCSE Physics Revision notes
                                                                                  Megan McDonald
                                                                                  Mapa Conceptual de Liderazgo
                                                                                  gabbi.mendoza
                                                                                  Checking out me History by John Agard
                                                                                  Eleanor Simmonds
                                                                                  What are they doing?
                                                                                  Tamara Urzhumova
                                                                                  2_PSBD HIDDEN QUS By amajad ali
                                                                                  Ps Test
                                                                                  1PR101 2.test - Část 9.
                                                                                  Nikola Truong