1.0 - Key Contents of an Overall Audit Strategy Flashcards
What is the first key content of an overall audit strategy?
Understanding the entity’s environment
What is the second key content of an overall audit strategy?
Understanding the accounting and internal control systems
What is the third key content of an overall audit strategy?
Risk and materiality
What is the fourth key content of an overall audit strategy?
Consequent nature, timing and extent of resources
What is the fifth key content of an overall audit strategy?
Coordination, direction, supervision and review
What is the sixth key content of an overall audit strategy?
Other matters
Understanding the entity’s environment
General economic factors and industry conditions
Important characteristics:
- business
- principal business strategies
- financial performance
- reporting requirements, including changes since the previous audit
The general level of competence of management
Understanding the accounting and internal control systems
The accounting policies adopted by the entity and changes in those policies
The effect of new accounting or auditing pronouncements
The auditor’s cumulative knowledge of the accounting and internal control systems, and the relative emphasis to be placed on different types of tests
Risk and materiality
The expected assessments of risks of fraud or error and identification of significant audit areas
The setting of materiality for audit planning purposes
The possibility of material misstatements, including the experience of past periods, or fraud
The identification of complex accounting areas including those involving estimates
Consequent nature, timing and extent of resources
Possible change of emphasis on specific audit areas
The effect of information technology on the audit
Coordination, direction, supervision and review
The number of locations
Staffing requirements
Need to attend client premises for inventory count or other year-end procedures
Other matters
The possibility that the going concern basis may be subject to question
Conditions requiring special attention
The terms of the engagement and any statutory responsibilities
The nature and timing of reports or other communication with the entity that expected under the engagement
