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CHAPTER 10 Overall Audit Plan and Audit Program

CHAPTER 10 Overall Audit Plan and Audit Program. obtain information about client’s legal obligations. obtain background information. preplan. Steps in audit planning. perform preliminary analytical procedures. set materiality, and assess acceptable audit risk and

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CHAPTER 10 Overall Audit Plan and Audit Program

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  1. CHAPTER 10Overall Audit Plan and Audit Program

  2. obtain information about client’s legal obligations obtain background information preplan Steps in audit planning perform preliminary analytical procedures set materiality, and assess acceptable audit risk and inherent risk develop overall audit plan and audit program understand internal control and assess control risk

  3. What are the different types of audit tests?

  4. What are the different types of audit tests? - procedures to obtain an understanding of internal control

  5. What are the different types of audit tests? - procedures to obtain an understanding of internal control The auditor must focus on both design and operation of internal controls.

  6. What are the different types of audit tests? - procedures to obtain an understanding of internal control The auditor’s understanding of in- ternal control must be supported by evidence.

  7. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls ?

  8. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls Tests of controls examine the effectiveness of internal control design and operation.

  9. Tests of controls examine the effectiveness of internal control design and operation. EXAMPLES: - enquiries of client personnel

  10. Tests of controls examine the effectiveness of internal control design and operation. Job Description Memo: EXAMPLES: - enquiries of client personnel - examination of docu- ments, records, and reports CANADIAN BANK CANADIAN BANK

  11. Tests of controls examine the effectiveness of internal control design and operation. EXAMPLES: - enquiries of client personnel - examination of docu- ments, records, and reports - observe control- related activities

  12. Tests of controls examine the effectiveness of internal control design and operation. EXAMPLES: - enquiries of client personnel - examination of docu- ments, records, and reports - observe control- related activities - re-perform client procedures

  13. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls How are these two types of tests related?

  14. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls Tests of controls are designed, in part, to determine whether the au- ditor’s understanding of in- ternal control is accurate.

  15. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls For efficiency, tests of controls and sub- stantive tests of transactions are frequently performed at the same time.

  16. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls - analytical procedures ?

  17. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls - analytical procedures Analytical procedures use comparisons and relation- ships to determine reasonable- ness of balances.

  18. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls - analytical procedures - tests of details of balances ?

  19. Tests of details of balances examine monetary misstatements in details of financial statement accounts. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls - analytical procedures - tests of details of balances

  20. What are the different types of audit tests? - procedures to obtain an understanding of internal control - tests of controls - analytical procedures - tests of details of balances The primary emphasis of this type of test is the balance sheet.

  21. As discussed in chapter 6, there are sixtypes of evidence - inspection - confirmation - documentation - observation - enquiries of client - reperformance - analytical procedures

  22. types of evidence - physical examination - confirmation - documentation (vouching) - observation - enquiries of client - reperformance - analytical procedures What types of evidence are produced by the different types of audit tests?

  23. types of evidence produced by test types of audit test ? What types of evidence are produced by the different types of audit tests? procedures to obtain an understanding of internal control

  24. types of evidence produced by test types of audit test What types of evidence are produced by the different types of audit tests? - documentation - observation - enquiries of client - reperformance procedures to obtain an understanding of internal control

  25. types of evidence produced by test types of audit test ? What types of evidence are produced by the different types of audit tests? tests of controls

  26. types of evidence produced by test types of audit test What types of evidence are produced by the different types of audit tests? - documentation - observation - enquiries of client - reperformance tests of controls

  27. types of evidence produced by test types of audit test ? What types of evidence are produced by the different types of audit tests? analytical procedures

  28. types of evidence produced by test types of audit test What types of evidence are produced by the different types of audit tests? analytical procedures - enquiries of client - analytical procedures

  29. types of evidence produced by test types of audit test ? What types of evidence are produced by the different types of audit tests? tests of details of balances

  30. types of evidence produced by test types of audit test What types of evidence are produced by the different types of audit tests? - physical examination - confirmation - documentation - enquiries of client - reperformance tests of details of balances

  31. The types of audit tests vary in their relative costs.

  32. The types of audit tests vary in their relative costs. Which type of audit test is most expensive?

  33. The types of audit tests vary in their relative costs. Tests of details of balances are the most ex- pensive type of audit test, e.g., confirmations, physical examination.

  34. The types of audit tests vary in their relative costs. Which type of audit test is least expensive?

  35. The types of audit tests vary in their relative costs. Analytical procedures are least expensive because of the relative ease of calculating and comparing, particularly if software is employed.

  36. What is the evidence mix?

  37. What is the evidence mix? the combination of the four types of audit tests used in the audit of a cycle

  38. the combination of the four types of audit tests used in the audit of a cycle What is the evidence mix? In general, if the auditor assesses the controls and accounting system as relatively effective, the mix will involve more tests of controls and less substantive tests.

  39. the combination of the four types of audit tests used in the audit of a cycle What is the evidence mix? Conversely, if the auditor assesses the controls and accounting system as relatively ineffective, the mix will involve less tests of controls and more substantive tests.

  40. What is an audit program?

  41. What is an audit program? The audit program is the set of detailed instructions for the entire collection of evidence for an audit.

  42. examination of documents and records observation enquiries What is an audit program? The audit program is the set of detailed instructions for the entire collection of evidence for an audit. includes: - procedures to perform analytical procedures

  43. What is an audit program? The audit program is the set of detailed instructions for the entire collection of evidence for an audit. includes: - sample sizes $ $ $ $ $ $ $ $ $ $ $ $

  44. What is an audit program? The audit program is the set of detailed instructions for the entire collection of evidence for an audit. includes: - items to select $ $ $ $ $ $ $ $ $ $ $ $

  45. What is an audit program? The audit program is the set of detailed instructions for the entire collection of evidence for an audit. includes: - timing of tests $ $ $ $ $ $ $ $ $ $ $ $

  46. What is an audit program? The audit program is the set of detailed instructions for the entire collection of evidence for an audit. Many programs have a separate set of subaudit programs for each transaction cycle.

  47. The audit program for most audits is designed in three parts.

  48. The audit program for most audits is designed in three parts. tests of controls

  49. The audit program for most audits is designed in three parts. tests of controls analytical procedures

  50. The audit program for most audits is designed in three parts. tests of controls analytical procedures tests of details of balances

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