Auditing and Assurance Notes
Week 1
Purpose of audit – enhance the degree of confidence of intended users in the financial report.
Expression of an opinion by the auditor on whether – the FR is prepared, in all material respects, in accordance with applicable financial reporting framework.
Opinion – whether the FR is presented fairly, in all material aspects, give a true and fair view in accordance with the framework.
ASA require auditor to exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit to
Identify and assess risk of material misstatement, whether due to fraud or error, based on an understanding of the entity and its environment, including the entity’s internal control.
Obtain sufficient appropriate audit evidence about whether material misstatement exist, through designing and implementing appropriate responses to the assessed risks.
Audit process (planning, audit evidence, audit reporting)
1. Planning
Understanding the business and determining risk
Assessment of the internal controls
Determining ‘significant risks’ for which special audit attention needs to be focused
2. Evidence gathering
Tests of controls
Substantive tests
3. Formation of the audit opinion
Planning
Risk identification what approaches/ procedure the auditor needs to adopt to reduce audit risk.
Plan- so that audit will be performed in an effective manner.
Key engagement team members in the planning appropriate quality control procedures
Consideration of comparisons of the entity’s financial information:
Comparable information for prior periods
Anticipated results of the entity
Similar industry information
Audit Risk- the risk of material misstatement of financial report
Assertion level
Inherent Risk (IR) the susceptibility (感受性) of an assertion(主张) to material misstatement, assuming there are no related controls, IR factors are generally business risks (BR) affecting a specific account assertion.
Control Risk (CR)
Purpose of audit – enhance the degree of confidence of intended users in the financial report.
Expression of an opinion by the auditor on whether – the FR is prepared, in all material respects, in accordance with applicable financial reporting framework.
Opinion – whether the FR is presented fairly, in all material aspects, give a true and fair view in accordance with the framework.
ASA require auditor to exercise professional judgment and maintain professional skepticism throughout the planning and performance of the audit to
Identify and assess risk of material misstatement, whether due to fraud or error, based on an understanding of the entity and its environment, including the entity’s internal control.
Obtain sufficient appropriate audit evidence about whether material misstatement exist, through designing and implementing appropriate responses to the assessed risks.
Audit process (planning, audit evidence, audit reporting)
1. Planning
Understanding the business and determining risk
Assessment of the internal controls
Determining ‘significant risks’ for which special audit attention needs to be focused
2. Evidence gathering
Tests of controls
Substantive tests
3. Formation of the audit opinion
Planning
Risk identification what approaches/ procedure the auditor needs to adopt to reduce audit risk.
Plan- so that audit will be performed in an effective manner.
Key engagement team members in the planning appropriate quality control procedures
Consideration of comparisons of the entity’s financial information:
Comparable information for prior periods
Anticipated results of the entity
Similar industry information
Audit Risk- the risk of material misstatement of financial report
Assertion level
Inherent Risk (IR) the susceptibility (感受性) of an assertion(主张) to material misstatement, assuming there are no related controls, IR factors are generally business risks (BR) affecting a specific account assertion.
Control Risk (CR)