Yozshuzil Learning Objectives LO1 Financiak the current audit environment, including developments in regulatory oversight and provincial regulation of public accountants. The principal source of evidence for audit conclusions will be the records of the auditee. Log In Sign Up. Reporting materiality Reporting materiality applies at the end of the audit when all errors are evaluated and viewed in relation to their known effects on the financial statements. D Visual evidence is highly reliable for confirming ffinancial ownership of the assets and their value.
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Inherent Risk IR is the susceptibility of an account balance or class of transactions to misstatements that could be material, individually or when aggregated with misstatements in other balances or classes, assuming that there were no related internal control.
Control Risk CR is the risk that a misstatement that could occur in an account balance or class of transactions and that could be material individually or when aggregated with misstatements in other balances or classes, will not be prevented or detected and corrected on a timely basis by the accounting and internal control systems.
Detection Risk DR is the risk that an auditors substantive procedures will not detect a misstatement that exists in an account balance or class of transactions that could be material, individually or when aggregated with misstatements in other balances or classes.
The evidence should be collected with reference to the general and any special objectives of audit. The principal source of evidence for audit conclusions will be the records of the auditee. Evidence must be planned, gathered and analysed before any conclusion can be reached. Reviewing data to identify unusual items confirmation and inquiry evaluation of the quality of internal control mechanisms computer assisted audit techniques CAATs 31 Analytical procedures APs consist of the evaluation of financial information in audit, made by a study of plausible relationships among both financial and non-financial data.
It involves analysis of significant ratios and trends including fluctuations that are inconsistent with other relevant data or which deviate from expectations. Comparisons involving a single component 2 types of comparisons. First type involves comparison of the recorded value of a component with its budgeted value. Second type trend analysis involves a comparison of a components current value with its value in previous years 33 Comparisons across components involves analysis of the relationship between more than one financial statement component ratio analysis 34 System analysis involves identification of anomalous items within an account balance rather than a macro level analysis of the balance itself- scan or analyze individual entries in transaction listings so as to locate unusual entries or abnormalities Predictive analysis involves the creation of an expectation using not just financial data but also operating or external data, independent of the accounting system Regression analysis statistical technique that creates an equation to reveal how one variable is related to one or more other variables 37 Business analysis High macro level analysis of financial statements involving critical ratios related to profitability, liquidity, financial stability, debt, etc.
Useful technique for identification of risk areas during planning and audit completion states and also for a better understanding of the entity and its operations. Various steps involved in SBA 39 The identification and in-depth evaluation of relevant key controls, and assessment of the extent, if any, to which the auditor can rely upon these controls provided that they are found to be operating effectively The testing of the operation of those key controls to establish whether they have operated effectively throughout the period under examination The evaluation of the results of the tests of control to establish whether the degree of reliance foreseen can be taken from the examination of the controls Substantive testing of a number of transactions, account balances, etc, to determine as relevant to the audit objectives whether, irrespective of the entitys system of controls, the financial statements of the entity are properly presented, free from material misstatements and the underlying transactions were regular.
Introduction, Concepts and overview of Financial Attest Audit Manual - PowerPoint PPT Presentation
Which of the following statements is false? Documentary evidence is more reliable than oral evidence. Evidence, of which the auditor has direct personal knowledge, is the most reliable evidence. Independent evidence obtained from external sources is more reliable than internal evidence.
FINANCIAL ATTEST AUDIT MANUAL CAG PDF