A5 Planning Flashcards
Audit Process
An overview of the audit process primarily involves engagement acceptance, assess risk & plan response, perform procedures & obtain evidence, form conclusions, reporting.
Planning Stage
Falls under the assess risk & plan response section and involves the auditor obtaining knowledge of the client business, develop audit strategy & audit plan, perform risk assessment procedures.
Understanding Client Business
Provides information regarding events & transactions that affect their FS. AICPA audit guides track publications, government publications, & AICPA accounting trends.
Audit strategy
Out lines objectives. Sets the scope, timing, and direction of the audit as well as guide the audit plan.
Audit Focus
Factors that affect the audit’s focus include evaluations of materiality risk & controls, account balances, disclosures, high risk areas of material misstatement, legal & regulatory matters.
Audit Plan
Based on the audit strategy and outlines NET of procedures performed at the relevant assertion level.
Audit Procedures
These are performed to obtain evidence to base the opinion on. These are also categorized as risk assessment procedures for further audit procedures.
Risk Assessment
These are procedures used to obtain understanding of the entity and its environment in order to assess the RMM and determine the NET of further procedures.
Further Audit Procedures
These include test of controls & Substantive Audit Procedures.
Test of Controls
These are used to evaluate the operating effectiveness of controls.
Substantive Procedures
These are used to detect material misstatements from all relevant numbers in the FS to ensure they are materially correct. SAP’s are required for all relevant assertions related to each material transaction class.
Financial Statements
FS are claims & assertions made implicitly or explicitly by mgmt. There are 6 assertions COVERUP. Completeness, Cutoff, Valuation Allocation & Accuracy, Existence & Occurrence, Rights & Obligation, and Understandability of Presentation & Classification.
Completeness
All account balances, transactions, & disclosures that should be recorded are & is included in the FS.
Cutoff
Details transactions have been recorded in the correct period.
Valuation, Allocation, Accuracy
Covers account balance, transactions, & disclosures are recorded & described fairly and also measured at appropriate amounts. Any resulting valuation adjustments are appropriately recorded.
