Week 5 Planning PowerPoints- Part 3 recorded

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Presentation Description

Part 3 of our discussion of planning.

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Presentation Transcript

Audit Plan:

Audit Plan A comprehensive list of the specific audit procedures that the audit team needs to perform to gather sufficient appropriate evidence on which to base their opinion on the financial statements When planning the engagement, the auditor needs to develop and document a plan the describes the procedures to be performed to assess the risk of material misstatement at the financial statement and assertion level The auditor must then carefully plan the nature, timing and extent of control tests and substantive tests that are designed to mitigate these risks to an acceptable level 3- 1

Substantive Audit Plan:

Substantive Audit Plan Should contain a list of audit procedures for gathering evidence related to the relevant assertions identified for the significant financial statement accounts and disclosures of an audit client Two ways to conduct substantive tests: Substantive analytical procedures Tests of details 3- 2

Exhibit 3.2 Assertions, Evidence and Audit Procedures:

Exhibit 3.2 Assertions, Evidence and Audit Procedures 3- 3

Types of Audit Procedures:

Types of Audit Procedures Inspection of records and documents Vouching Tracing Scanning Inspection of tangible assets Observation Inquiry Confirmation Recalculation Reperformance Analytical Procedures 3- 4

Analytical Procedures:

Analytical Procedures 3- 5

Planning in a Computerized Environment:

Planning in a Computerized Environment Temporary transaction trails Uniform processing of transactions Potential for errors and fraud Potential for increased management supervision Initiation or subsequent execution of transactions by computer Use of cloud computing applications 3- 6

Effect of Client’s Computer Processing on Audit Planning:

Effect of Client ’ s Computer Processing on Audit Planning Extent to which computers are used Complexity of computer operations Organizational structure of computer processing Availability of data Need for specialized skills Use of CAAT ’ s 3- 7

Computer Assisted Audit Tools and Techniques (CAATs):

Computer Assisted Audit Tools and Techniques (CAATs) With CAATS, the auditor is able to access and extract client information without disrupting data processing. Some CAATs Procedures: Calculate field statistics (totals, high, low and average value) Perform complex recalculations Join and compare different data files Perform detailed analysis Stratification Gap and duplicate detection Sample selection 3- 8

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