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Summary of the Audit Process
PHASE I Plan and design an audit approach Accept client and perform initial planning Understand the client’s business and industry Assess client business risk Perform preliminary analytical procedures Set materiality and assess acceptable audit risk and inherent risk Understand internal control and assess control risk Gather information to assess fraud risks Develop overall audit plan and audit program PHASE II Perform tests of controls and substantive tests of transactions
Plan to reduce assessed level of control risk?
Yes Apago PDF Enhancer Perform tests of controls* Perform substantive tests of transactions Assess likelihood of misstatements in financial statements PHASE III Perform analytical procedures and tests of details of balances
High or unknown
Perform analytical procedures Perform tests of key items Perform additional tests of details of balances
PHASE IV Complete the audit and issue an audit report
Perform additional tests for presentation and disclosure Accumulate final evidence Evaluate results Issue audit report Communicate with audit committee and management
*The extent of testing of controls is determined by planned reliance on controls. For public companies required to have an audit of internal control, testing must be sufficient to issue an opinion on internal control over financial reporting.
AUDITING AND ASSURANCE SERVICES
AN INTEGRATED APPROACH
Includes coverage of international standards and global auditing issues, in addition to coverage of PCAOB Auditing Standards, the risk assessment SASs, the Sarbanes–Oxley Act, and Section 404 audits.
ALVIN A. ARENS
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PricewaterhouseCoopers Emeritus Professor Michigan State University
RANDAL J. ELDER
MARK S. BEASLEY
North Carolina State University Deloitte Professor of Enterprise Risk Management
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Library of Congress Cataloging-in-Publication Information is available. Arens, Alvin A. Auditing and assurance services: an integrated approach/ Alvin A. Arens, Randal J. Elder, Mark S. Beasley.—14th ed. p. cm. Includes index. ISBN-13: 978-0-13-257595-9 ISBN-10: 0-13-257595-7 1. Auditing. I. Elder, Randal J. II. Beasley, Mark S. III. Title.
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