A5 (1 -2 )- Integrated Audit

Question 0

INTEGRATED AUDITS (issuers vs. non issuers)

Answer 0

Under PCAOB standards/, auditors of issuers are required to perform an integrated audit, auditing both the financial statements and management’s assessment of the effectiveness of internal control over financial
reporting

SSAEs/ allow an auditor to examine and report on a nonissuer’s internal control over financial reporting that is integrated with a financial statement audit.

Question 1

Auditor requirements

Answer 1

1) . Plan the engagement to achieve both of financial statements audit and management assessment of effectiveness of internal control over financial reporting.
2) . Test of controls designed to provide sufficient evidence for opinion on internal control and control risk assessment.

Question 2

Management requirements

Answer 2

1) . Establishing and maintaining an adequate control structure.
2) . Evaluate effectiveness of internal control
3) . Provide evidence supporting design and monitoring of its internal controls.
4) provide representation letter to the auditor about all responsibilities

Question 3

Planing the engagement

Answer 3

Developing overall strategy for the scope and performance based in following :-

1) . Industry,business, and operations
2) . Prior knowledge of entities internal control.
3) . Management method evaluating its controls
4) . Materiality and risks
5) . Previously communicated deficiencies
6) . Nature and extent of available evidence
7) . Fraud risk assessment.
8) . Using of work of others

Question 4

Top-Down approach test of controls

Answer 4

Evaluate overall risks at the financial statement levels consider controls at entity level, and then focus on accounts or disclosures for which there is possibly misstatements.

Question 5

Tests of control

Answer 5

1) . Evaluate the design of effectiveness of controls for entity’s objectives
2) . Test the operating effectiveness of controls .

Question 6

Evaluating control deficiencies ( significant deficiencies or material weakness , or combination)

Answer 6

1) . The magnitude of potential misstatement resulting from deficiency
2) . The like hood that the control will prevent or detect a material misstatement

Question 7

Forming an opinion and evaluating the management report.

Answer 7

The management report should include the following :-

1) . Management resonsiblity
2) . Describe the subject matter of the examination ( FS preparation )
3) . Criteria used by management of measurement
4) . Management assertion
5) . List of significant deficiencies

Question 8

COMMUNICATION OF DEFICIENCIES IN INTERNAL CONTROL

Answer 8

Summary Chart

Question 9

COMMUNICATION OF DEFICIENCIES IN INTERNAL CONTROL (ISSUER)

Answer 9

Summary Chart