AUD 3 Internal Control 10 - 3 Flashcards
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
An auditor performs the following procedures to obtain and apply an understanding of internal control to an audit:
Step 1 – Obtain an understanding of the design of all 5 components of the entity’s internal control (CRIME) through the performance of risk assessment procedures.
Step 2 – Document the understanding of Internal Control.
Step 3 – Assess Risk of Material Misstatement (RMM) which consists of inherent risk (IR) and control risk (CR).
RMM = IR × CR
Step 4 – Develop an audit strategy to either:
o (RELY?)
Perform tests of control (TofC) to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests): or
o (NOT Rely)
Decide NOT to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.
Step 5 – Reassess Risk of Material Misstatement and evaluate results.
o For controls for which tests of controls were performed, evaluate results to reassess RMM and determine if it is appropriate to modify the nature, timing, and extent of further audit procedures.
Step 6 – Document conclusions and determine the effect on the planned substantive procedures. At this point, the audit program needs to be developed or revised for further audit procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
An auditor performs the following procedures to obtain and apply an understanding of internal control to an audit:
Step 1 – Obtain an understanding of the design of all 5 components of the entity’s internal control (CRIME) through the performance of risk assessment procedures.
Step 2 – Document the understanding of Internal Control.
Step 3 – Assess Risk of Material Misstatement (RMM) which consists of inherent risk (IR) and control risk (CR).
RMM = IR × CR
Step 4 – Develop an audit strategy to either:
o (RELY?)
Perform tests of control (TofC) to determine if CR is below maximum, reducing RMM below the level of IR and allowing for the modification of the nature, timing, and extent of further audit procedures (sub tests): or
o (NOT Rely)
Decide NOT to perform tests of controls, assessing CR at the maximum level as if the control did not exist, and measuring RMM as being equal to IR.
Step 5 – Reassess Risk of Material Misstatement and evaluate results.
o For controls for which tests of controls were performed, evaluate results to reassess RMM and determine if it is appropriate to modify the nature, timing, and extent of further audit procedures.
Step 6 – Document conclusions and determine the effect on the planned substantive procedures. At this point, the audit program needs to be developed or revised for further audit procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The au_____ should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should per____ the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the r___ assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to i_____fy and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and as____ the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the r___s of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misst________
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement le___
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level a__ at the relevant assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the rele_____ assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant as_______ level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for cl___es of transactions,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of tran_______s,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, acc____ balances,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account bal___es, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and dis______es.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing R___ of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at the financial statement level and at the relevant assertion level for classes of transactions, account balances, and disclosures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The aud_____ first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first ass____s risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses r___ of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of ma______ misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement le__
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the fin______ statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by eva______ng the entity’s ability to prepare financial statements
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the en___y’s ability to prepare financial statements that are fairly presented
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s a____ty to prepare financial statements that are fairly presented
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to pre____ financial statements that are fairly presented
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are f___ly presented
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly pr______ed
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
in ac________e with the applicable financial reporting framework.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
in accordance with the applicable financial reporting framework.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
in accordance with the appl______ financial reporting framework.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
in accordance with the applicable financial reporting framework.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
in accordance with the applicable financial re____ing framework.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
in accordance with the applicable financial reporting framework.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
in accordance with the applicable financial reporting frame____.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level
by evaluating the entity’s ability to prepare financial statements that are fairly presented
in accordance with the applicable financial reporting framework.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include fa____s such as
the auditor’s perception of the competency of the entity’s accounting personnel;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s per_______ of the competency of the entity’s accounting personnel;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the com_______y of the entity’s accounting personnel;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s ac______ing personnel;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting per_____el;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an eva________ of the entity’s ability to develop estimates and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the en___y’s ability to develop estimates and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to de_____ estimates and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop est_____s and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and inter____ accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting prin____es;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the au_____ considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor con_____s management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers ma________ aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management agg_______ or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or bel_____s management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is un___ pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pre_____ to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achi___ difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve diff____ financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial g___s;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the ind_____ or the economy has created particular challenges;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the eco____ has created particular challenges;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has cr___ed particular challenges;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular cha_____es;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the e____y is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is se__ing financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking fi_____ing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or an_____ting entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating en___ing into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a su_____tial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial trans_____.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level.
This will include factors such as
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor fi___ assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the comp____cy of the entity’s accounting personnel;
an eval_____ of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pres____ to achieve difficult financial goals;
if the ind____y or the economy has created particular challenges;
or if the entity is seeking fin____ing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are f___ly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s acc___ting personnel;
an evaluation of the entity’s ab____y to develop estimates and interpret accounting principles;
whether the auditor considers management aggre_____ or believes management is under pressure to achieve difficult financial goals;
if the industry or the eco___y has created particular challenges;
or if the entity is seeking financing or anticipating entering into a subs______ transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other fa____s may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may inc_____ the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the r___ that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, ta___ as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a wh___, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be mat______y misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially mis____ed.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
A__ of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as ……………..
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework.
This will include factors such as
the auditor’s perception of the competency of the entity’s accounting personnel;
an evaluation of the entity’s ability to develop estimates and interpret accounting principles;
whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
if the industry or the economy has created particular challenges;
or if the entity is seeking financing or anticipating entering into a substantial transaction.
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The aud____ may use either a substantive approach, in which substantive procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a subs_____ approach, in which substantive procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive app___ch, in which substantive procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which subs______ procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive pro______es are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emp_____ed,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a com___ed approach, in which both tests of controls and substantive procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both tests of controls and substantive procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which bo__ tests of controls and substantive procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both tests of controls and substantive procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both t___s of controls and substantive procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both tests of controls and substantive procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both tests of controls and subst_____ procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both tests of controls and substantive procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both tests of controls and substantive pro______es are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both tests of controls and substantive procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both tests of controls and substantive procedures are u__d.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized,
or a combined approach, in which both tests of controls and substantive procedures are used.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized, or a combined approach, in which both tests of controls and substantive procedures are used.
• The au_____ needs to
o Identify the risks.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized, or a combined approach, in which both tests of controls and substantive procedures are used.
• The auditor needs to
o Identify the risks.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor n___s to
o Identify the risks.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized, or a combined approach, in which both tests of controls and substantive procedures are used.
• The auditor needs to
o Identify the risks.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Id_____y the risks.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized, or a combined approach, in which both tests of controls and substantive procedures are used.
• The auditor needs to
o Identify the risks.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the r___s.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the id\_\_\_\_\_ied risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified r\_\_\_s to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Re\_\_\_\_ the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of pot\_\_\_\_\_ misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential miss\_\_\_\_\_\_\_\_s that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could oc\_\_\_at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the rel\_\_\_\_\_\_ assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant as\_\_\_\_\_\_\_ level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion le\_\_\_.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Con\_\_\_\_\_ whether the risks are so significant that they could result in a material misstatement of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the r\_\_\_s are so significant that they could result in a material misstatement of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so sig\_\_\_\_\_\_\_ that they could result in a material misstatement of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could re\_\_\_\_ in a material misstatement of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misst\_\_\_\_\_\_\_ of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likeli\_\_\_\_\_ (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (pro\_\_\_\_\_\_\_y) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified r\_\_\_s could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the id\_\_\_\_\_ied risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could re\_\_\_\_ in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in ma\_\_\_\_\_\_ misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Id\_\_\_\_fy the risks.
o Rel\_\_\_ the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
o Cons\_\_\_\_ whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Cons\_\_\_\_ the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, or a combined approach.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized, or a combined approach, in which both tests of controls and substantive procedures are used.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor may use either a substantive approach, in which substantive procedures are emphasized, or a combined approach, in which both tests of controls and substantive procedures are used.
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the r___ assessment is based on an expectation that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk asse________ is based on an expectation that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is b__ed on an expectation that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expe_______ that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that con____s are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are ope___ing effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating eff_____ly,
the auditor should test the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the aud____ should test the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should t___ the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the op_____ng effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating eff_____ness of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of con___s (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (T__C)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (T____)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been det______ed to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably de____ed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be su_____ly designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to pre____ or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or de____ material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or detect ma______ misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating eff______ly, the auditor should test the operating effectiveness of controls (TofC) that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC) that have been determined to be suitably designed to prevent or detect material misstatements.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC) that have been determined to be suitably designed to prevent or detect material misstatements.
• Intend to R___?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC) that have been determined to be suitably designed to prevent or detect material misstatements.
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• In____ to Rely?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The r___ assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk asse_______ may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may N__ include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT inc____ an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an exp______n that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that co_____s operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate eff______y
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Sub______ approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inade\_\_\_\_ / Ineffective/ weak.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Inef\_\_\_\_\_/ weak.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ w\_\_\_.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Con\_\_\_\_s appear inadequate / Ineffective/ weak.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Au\_\_\_\_\_ believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor be\_\_\_\_\_\_s that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that per\_\_\_\_ing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing exte\_\_\_\_\_ substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive subst\_\_\_\_\_\_ procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be m\_\_\_ cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost ef\_\_\_\_\_\_ than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more c\_\_\_ effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective th\_\_ performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing t\_\_\_s of controls. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of con\_\_\_\_. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Co\_\_/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/be\_\_\_\_\_ – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – ineffi\_\_\_\_\_).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC).
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC) that have been determined to be suitably designed to prevent or detect material misstatements.
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC) that have been determined to be suitably designed to prevent or detect material misstatements.
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the con____s appear effective, tests of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear eff______, tests of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, t___s of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of con____s will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be per____ed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Com___ed approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined app______):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The au____’s risk assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s r___ assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk asse_______ includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment in_____es an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expe_______ of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of op_____ing effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating eff_______ess of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of con____s
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likeli_____ of material misstatement is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misst_______ is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lo___ if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the con____ operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control ope_____s effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates eff______ly (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (C___ effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost eff_______)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective)
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When subst______ procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive pro______es alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures al___ do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do n__ provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not pro____ sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide suffi_____ audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evid_____.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls ap____ effective, tests of controls will be performed when (Combined approach):
- The auditor’s risk assessment includes an expectation of operating effectiveness of controls because the likelihood of material misstatement is lower if the control operates effectively (Cost effective) or
- When substantive procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
If the controls appear effective, tests of controls will be performed when (Combined approach):
- The auditor’s risk assessment includes an expectation of operating effectiveness of controls because the likelihood of material misstatement is lower if the control operates effectively (Cost effective) or
- When substantive procedures alone do not provide sufficient audit evidence.
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC) that have been determined to be suitably designed to prevent or detect material misstatements.
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
If the controls appear effective, tests of controls will be performed when (Combined approach):
- The auditor’s risk assessment includes an expectation of operating effectiveness of controls because the likelihood of material misstatement is lower if the control operates effectively (Cost effective) or
- When substantive procedures alone do not provide sufficient audit evidence.
If the risk assessment is based on an expectation that controls are operating effectively, the auditor should test the operating effectiveness of controls (TofC) that have been determined to be suitably designed to prevent or detect material misstatements.
• Intend to Rely?
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls. (Cost/benefit – inefficient).
If the controls appear effective, tests of controls will be performed when (Combined approach):
- The auditor’s risk assessment includes an expectation of operating effectiveness of controls because the likelihood of material misstatement is lower if the control operates effectively (Cost effective) or
- When substantive procedures alone do not provide sufficient audit evidence.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since t___s of controls alone are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of con____s alone are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls al___ are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are n__ normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally suf_____ upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to b___ an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an a___ opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further au___ procedures will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit pro______es will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be com___ed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a comb______ of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of t___s of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of tests of co_____s and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of tests of controls and subs_______ procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion,
the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive proc______s.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the dec_____ to perform tests of controls will be made when the auditor believes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to per____ tests of controls will be made when the auditor believes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform t___s of controls will be made when the auditor believes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of con____s will be made when the auditor believes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the aud____ believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor be______s
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a com_______ of tests of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of t___s of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of co_____s and
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of subs______ procedures
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decr____d scope of substantive procedures
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased sc___ of substantive procedures
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive proc______s is likely to be
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more c___ effective
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be m___ cost effective
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost eff_____e than performing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than per____ing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing m___ extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more ex_______ substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive subs_______ procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes
that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive pro______es.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
The overall approach here, as it relates to con____s is to
• Identify controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
The overall approach here, as it relates to controls is to
• Identify controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The over___ approach here, as it relates to controls is to
• Identify controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall app______ here, as it relates to controls is to
• Identify controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it re___es to controls is to
• Identify controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify con____s that are relevant to specific assertions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific ass______s
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are rel______ to specific assertions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to spe_____ assertions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are likely to pre____ or detect material misstatements,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are l____y to prevent or detect material misstatements,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are likely to prevent or de____ material misstatements,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are likely to prevent or detect ma______ misstatements,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are likely to prevent or detect material missta_______s,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
• Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Per____ tests of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform t___s of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of con____s to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to eva_____ the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the eff_______ess of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the effectiveness of those con____s.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Since tests of controls alone are not normally sufficient upon which to base an audit opinion, the further audit procedures will be composed of a combination of tests of controls and substantive procedures.
Thus, the decision to perform tests of controls will be made when the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures is likely to be more cost effective than performing more extensive substantive procedures.
The overall approach here, as it relates to controls is to
- Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements, and
- Perform tests of controls to evaluate the effectiveness of those controls.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The au____ also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also as_____es risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses r___ at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the fin_______ statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement le___ by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by id_____ying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those i___s that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a pr_______ty for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for miss________.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual acc____s, such as items on the balance sheet;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the bal____ sheet;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
indiv______ accounts, such as items on the balance sheet;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as i___s on the balance sheet;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sh___;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of tran_______s, such as items on the income statement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
cl___es of transactions, such as items on the income statement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as i___s on the income statement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the in____ statement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income sta________;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or dis_______es, including footnotes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including foo_____s
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes as well as desc________s and notations on the financial statements themselves.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes as well as descriptions and notations on the financial statements themselves.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes as well as descriptions and nota____s on the financial statements themselves.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes as well as descriptions and notations on the financial statements themselves.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes as well as descriptions and notations on the fin_______ statements themselves.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes as well as descriptions and notations on the financial statements themselves.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes as well as descriptions and notations on the financial statements themselves.
I___s will represent a greater risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be
individual accounts, such as items on the balance sheet;
classes of transactions, such as items on the income statement;
or disclosures, including footnotes as well as descriptions and notations on the financial statements themselves.
Items will represent a greater risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will rep_______ a greater risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a gre____ risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater r___ of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misst________ for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a va____y of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of rea___s.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to er____ as a result of:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a re____ of:
• The difficulty of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The diff____y of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of ob____ing information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining info_______ needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information n___ed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to acc______ly record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately re____ the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately record the transa_____;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The difficulty of obtaining information needed to accurately record the transaction;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
- The difficulty of obtaining information needed to accurately record the transaction; or
- The com______y of the requirements for accounting for an item.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
- The difficulty of obtaining information needed to accurately record the transaction; or
- The complexity of the requirements for accounting for an item.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The complexity of the req________s for accounting for an item.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The complexity of the requirements for accounting for an item.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The complexity of the requirements for acc_____ing for an item.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The complexity of the requirements for accounting for an item.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The complexity of the requirements for accounting for an i___.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
Items will represent a greater risk of misstatement for a variety of reasons.
It may be due to error as a result of:
• The complexity of the requirements for accounting for an item.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be individual accounts, such as items on the balance sheet; classes of transactions, such as items on the income statement; or disclosures, including footnotes as well as descriptions and notations on the financial statements themselves.
Items will represent a greater risk of misstatement for a variety of reasons. It may be due to error as a result of:
- The difficulty of obtaining information needed to accurately record the transaction; or
- The complexity of the requirements for accounting for an item.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The auditor also assesses risk at the financial statement level by identifying those items that may have a propensity for misstatement.
This may be individual accounts, such as items on the balance sheet; classes of transactions, such as items on the income statement; or disclosures, including footnotes as well as descriptions and notations on the financial statements themselves.
Items will represent a greater risk of misstatement for a variety of reasons. It may be due to error as a result of:
- The difficulty of obtaining information needed to accurately record the transaction; or
- The complexity of the requirements for accounting for an item.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An i___ may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susc_______ to fraud because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fr___ because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valu____ item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misapp______ed by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by em____ees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by employees or ot___s;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is a valuable item that might be misappropriated by employees or others;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
- It is a valuable item that might be misappropriated by employees or others;
- It is an i___ for which it is easy to conceal a misstatement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
- It is a valuable item that might be misappropriated by employees or others;
- It is an item for which it is easy to conceal a misstatement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is an item for which it is e__y to conceal a misstatement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is an item for which it is easy to conceal a misstatement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is an item for which it is easy to con____ a misstatement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is an item for which it is easy to conceal a misstatement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is an item for which it is easy to conceal a misstat______;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• It is an item for which it is easy to conceal a misstatement;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
- It is an item for which it is easy to conceal a misstatement; or
- A misst________ to the item has the potential of influencing other actions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
- It is an item for which it is easy to conceal a misstatement; or
- A misstatement to the item has the potential of influencing other actions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the i___ has the potential of influencing other actions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the po_______ of influencing other actions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of inf_______ing other actions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other ac____s
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing ot___ actions
such as
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the pay____of a commission
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a comm_______
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
or the e___ing of a bonus based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
or the earning of a bonus based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
or the earning of a bo___ based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
or the earning of a bonus based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
or the earning of a bonus b__ed on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
or the earning of a bonus based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
or the earning of a bonus based on perfo________.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
• A misstatement to the item has the potential of influencing other actions
such as
the payment of a commission
or the earning of a bonus based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fr__d because:
- It is a valuable item that might be misappropriated by employees or others;
- It is an item for which it is easy to conceal a misstatement; or
- A misstatement to the item has the potential of influencing other actions such as the payment of a commission or the earning of a bonus based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
- It is a valuable item that might be misappropriated by employees or others;
- It is an item for which it is easy to conceal a misstatement; or
- A misstatement to the item has the potential of influencing other actions such as the payment of a commission or the earning of a bonus based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
- It is a valuable item that might be misappropriated by employees or others;
- It is an item for which it is easy to conceal a misstatement; or
- A misstatement to the item has the potential of influencing other actions such as the payment of a commission or the earning of a bonus based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
An item may be more susceptible to fraud because:
- It is a valuable item that might be misappropriated by employees or others;
- It is an item for which it is easy to conceal a misstatement; or
- A misstatement to the item has the potential of influencing other actions such as the payment of a commission or the earning of a bonus based on performance.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once i___s that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are sus________ to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to miss________ are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are id_____ied, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, r___ of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of ma______ misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is as______ed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the rele____ assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant ass_____ level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion le___.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an i___ is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is li__ly to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be mi_______ed will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally aff___ all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the ass_______s and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect a__ of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the r___ should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be an____ed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed ac________ly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an e____y that might have a tendency to overstate results
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that mi___ have a tendency to overstate results
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a te____cy to overstate results
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to over_____ results
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate re____s because it is competing in the capital markets,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is co____ing in the capital markets,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the ca_____ markets,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital ma____s,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, s___s may be likely to be overstated
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be l___ly to be overstated
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the au____ will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be co_____ed about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occu______, since the entity may record sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the e____y may record sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may re____ sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record s___s that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did n__ occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not oc___;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
o Cut___, since the entity may record sales from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
o Cutoff, since the entity may record sales from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the en___y may re____ sales from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record s___s from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the n___ period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next pe____ in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the cur____ period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the current pe_____;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the current period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the current period;
o Accu____, since the entity may record sales in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Cutoff, since the entity may record sales from the next period in the current period;
o Accuracy, since the entity may record sales in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may re____ sales in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record s___s in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in am____s greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts gr___er than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater th__ the act___ transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater than the actual tran_______s;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater than the actual transactions;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater than the actual transactions; and
o Class________, since the entity may wish to characterize the proceeds from the issuance of debt
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Accuracy, since the entity may record sales in amounts greater than the actual transactions; and
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to chara_______ the proceeds from the issuance of debt
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the pro____s from the issuance of debt
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issu_____ of debt
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of d___ or from the sale of assets
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the s___ of assets
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of as___s
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do n__ generate revenues into sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not gen______ revenues into sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate rev____s into sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into s___s.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The au_____ would not be concerned about completeness,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The auditor would not be concerned about completeness,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o The auditor would n__ be concerned about completeness,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o The auditor would not be concerned about completeness,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o The auditor would not be con____ed about completeness,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o The auditor would not be concerned about completeness,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o The auditor would not be concerned about comple______,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o The auditor would not be concerned about completeness,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to over_____ results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
o Cutoff, since the entity may record sales from the next period in the current period;
o Accuracy, since the entity may record sales in amounts greater than the actual transactions; and
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The auditor would not be concerned about completeness, however, since an entity wishing to overstate sales would not omit sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to overstate results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
o Cutoff, since the entity may record sales from the next period in the current period;
o Accuracy, since the entity may record sales in amounts greater than the actual transactions; and
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The auditor would not be concerned about completeness, however, since an entity wishing to overstate sales would not omit sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to OVERSTATE results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occur______, since the entity may record sales that did not occur;
o Cut___, since the entity may record sales from the next period in the current period;
o Accu____, since the entity may record sales in amounts greater than the actual transactions; and
o Classi______, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The auditor would not be concerned about comple______, however, since an entity wishing to overstate sales would not omit sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to OVERSTATE results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
o Cutoff, since the entity may record sales from the next period in the current period;
o Accuracy, since the entity may record sales in amounts greater than the actual transactions; and
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The auditor would not be concerned about completeness, however, since an entity wishing to overstate sales would not omit sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are id______ed, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to OVERSTATE results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
o Cutoff, since the entity may record sales from the next period in the current period;
o Accuracy, since the entity may record sales in amounts greater than the actual transactions; and
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The auditor would not be concerned about completeness, however, since an entity wishing to overstate sales would not omit sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to OVERSTATE results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
o Cutoff, since the entity may record sales from the next period in the current period;
o Accuracy, since the entity may record sales in amounts greater than the actual transactions; and
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The auditor would not be concerned about completeness, however, since an entity wishing to overstate sales would not omit sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be an____ed accordingly.
For example:
• For an entity that might have a tendency to OVERSTATE results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
o Cutoff, since the entity may record sales from the next period in the current period;
o Accuracy, since the entity may record sales in amounts greater than the actual transactions; and
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The auditor would not be concerned about completeness, however, since an entity wishing to overstate sales would not omit sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to OVERSTATE results because it is competing in the capital markets, sales may be likely to be overstated and the auditor will be concerned about:
o Occurrence, since the entity may record sales that did not occur;
o Cutoff, since the entity may record sales from the next period in the current period;
o Accuracy, since the entity may record sales in amounts greater than the actual transactions; and
o Classification, since the entity may wish to characterize the proceeds from the issuance of debt or from the sale of assets that do not generate revenues into sales.
o The auditor would not be concerned about completeness, however, since an entity wishing to overstate sales would not omit sales.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an e_____y that might have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that mi___ have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a te____cy to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to und______ results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate re____s for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the pur____ of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of av____ing taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding t____ion,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
s___s may be likely to be understated
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
sales may be likely to be understated
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
sales may be l___ly to be understated
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
sales may be likely to be understated
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
sales may be likely to be understated and the au_____ will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
sales may be likely to be understated and the auditor will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
sales may be likely to be und_______ed and the auditor will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
sales may be likely to be understated and the auditor will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
sales may be likely to be understated and the auditor will be con____ed about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation,
sales may be likely to be understated and the auditor will be concerned about:
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Compl_______, since the entity may omit sales;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly.
For example:
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the e____y may omit sales;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity m__ omit sales;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may o___ sales;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit s___s;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cut___, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cutoff, since the e____y may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may post____the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the rec______n of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of s___s that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that oc____ed this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this pe____ until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred th__ period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period un___ the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the n___ period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next pe____;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Val______, since sales may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Valuation, since sales may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Valuation, since sa__s may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Valuation, since sales may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales m__ be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be re____ed at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lo___ than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower th__ the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the ac____ amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual am____s.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The au_____ would be less concerned about occurrence,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The auditor would be less concerned about occurrence,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The auditor would be l___ concerned about occurrence,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The auditor would be less concerned about occurrence,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less con____ed about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occu______, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an e____y intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity in____ing to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to unde_______ sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate s___s is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report s___s that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to re____ sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did n__ occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not oc___;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur;
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be l___ concerned with classification,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classification,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less con____ed with classification,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classification,
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classi________, since an entity intending to understate sales
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classification, since an entity intending to understate sales
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an e____y intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity in____ing to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to unde______ sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate s___s is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is n__ likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not l___ly to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to in_____ items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include it__s that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are n__ properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not pro___ly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly re____ed as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that cat_____y.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to und_______ results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to understate results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to UNDERSTATE results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
• For an entity that might have a tendency to UNDERSTATE results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly. For example:
• For an entity that might have a tendency to UNDERSTATE results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
Obtain an Understanding of the Entity’s Internal Control Structure (AU-C 315)
Step 3 –
3. Assessing Risk of Material Misstatement (RMM)
Once items that are susceptible to misstatement are identified, risk of material misstatement is assessed at the relevant assertion level.
The fact that an item is likely to be misstated will generally affect all of the assertions and the risk should be analyzed accordingly. For example:
• For an entity that might have a tendency to UNDERSTATE results for the purpose of avoiding taxation, sales may be likely to be understated and the auditor will be concerned about:
o Completeness, since the entity may omit sales;
o Cutoff, since the entity may postpone the recognition of sales that occurred this period until the next period; and
o Valuation, since sales may be reported at amounts lower than the actual amounts.
o The auditor would be less concerned about occurrence, since an entity intending to understate sales is not likely to report sales that did not occur; and
o The auditor would be less concerned with classification, since an entity intending to understate sales is not likely to include items that are not properly reported as sales in that category.
- Assessing Risk of Material Misstatement (RMM)
Will the auditor reply on internal control?
NO – RMM (high) = Substantive Approach
YES – RMM (low) = Combined Approach
- Assessing Risk of Material Misstatement (RMM)
Will the auditor reply on internal control?
NO – RMM (high) = Substantive Approach
YES – RMM (low) = Combined Approach
- Assessing Risk of Material Misstatement (RMM)
Will the auditor reply on internal control?
NO – RMM (high) = Sub________ Approach
YES – RMM (low) = Co_____ed Approach
- Assessing Risk of Material Misstatement (RMM)
Will the auditor reply on internal control?
NO – RMM (high) = Substantive Approach
YES – RMM (low) = Combined Approach
The auditor should perform the risk assessment at what levels?
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at
1) the financial statement level and
2) at the relevant assertion level
The auditor should perform the risk assessment to identify and assess the risks of material misstatement at what levels?
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
1) at the financial statement level and
2) at the relevant assertion level
The auditor should perform the risk assessment at the financial statement level and at the relevant assertion level
for
_______ of transactions,
_________ balances,
and ____________.
The auditor should perform the risk assessment at the financial statement level and at the relevant assertion level
for
classes of transactions,
account balances,
and disclosures.
The auditor should perform the risk assessment at the financial statement level and at the relevant assertion level
for
classes of ____________,
account _________,
and ___________.
The auditor should perform the risk assessment at the financial statement level and at the relevant assertion level
for
classes of transactions,
account balances,
and disclosures.
The auditor should perform the risk assessment at the financial statement level and at the relevant assertion level
for
The auditor should perform the risk assessment at the financial statement level and at the relevant assertion level
for
classes of transactions,
account balances,
and disclosures.
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
at the _____________________ level
and at the _____________________ level
The auditor should perform the risk assessment to identify and assess the risks of material misstatement
at the financial statement level
and at the relevant assertion level
The auditor first assesses risk of material misstatement at the ____________________ level
The auditor first assesses risk of material misstatement at the financial statement level
The auditor first assesses risk of material misstatement at the financial statement level by ____________ the entity’s ability to prepare financial statements
The auditor first assesses risk of material misstatement at the financial statement level by evaluating the entity’s ability to prepare financial statements
The auditor first assesses RMM at the financial statement level by evaluating the entity’s ability to ________ financial statements
The auditor first assesses RMM at the financial statement level by evaluating the entity’s ability to prepare financial statements
What are factors in evaluating the entity’s ability to prepare financial statements?
Hint:
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
What are factors in evaluating the entity’s ability to prepare financial statements?
Factors such as
- The auditor’s perception of the competency of the entity’s accounting personnel;
- An evaluation of the entity’s ability to develop estimates and interpret accounting principles;
- Whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
- If the industry or the economy has created particular challenges; or
- If the entity is seeking financing or anticipating entering into a substantial transaction.
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
What are factors in evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework?
Hint:
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
What are factors in evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework?
Factors such as
- The auditor’s perception of the competency of the entity’s accounting personnel;
- An evaluation of the entity’s ability to develop estimates and interpret accounting principles;
- Whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
- If the industry or the economy has created particular challenges; or
- If the entity is seeking financing or anticipating entering into a substantial transaction.
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
What are factors in evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework?
Factors such as
- The auditor’s perception of the __________ of the entity’s accounting personnel;
- An evaluation of the entity’s _______ to develop estimates and interpret accounting principles;
- Whether the auditor considers management __________ or believes management is under _________ to achieve difficult financial goals;
- If the ________ or the _________ has created particular challenges; or
- If the entity is seeking __________ or anticipating entering into a substantial transaction.
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
What are factors in evaluating the entity’s ability to prepare financial statements that are fairly presented in accordance with the applicable financial reporting framework?
Factors such as
- The auditor’s perception of the competency of the entity’s accounting personnel;
- An evaluation of the entity’s ability to develop estimates and interpret accounting principles;
- Whether the auditor considers management aggressive or believes management is under pressure to achieve difficult financial goals;
- If the industry or the economy has created particular challenges; or
- If the entity is seeking financing or anticipating entering into a substantial transaction.
Any of these or a variety of other factors may increase the risk that the financial statements, taken as a whole, will be materially misstated.
What are 2 approaches that the auditor can use?
1) a _____________ approach
2) a _________ approach
What are 2 approaches that the auditor can use?
1) a substantive approach
2) a combined approach
The auditor may use either
a substantive approach
- in which substantive procedures are emphasized,
or
a combined approach,
- in which both tests of controls and substantive procedures are used.
When performing either a substantive approach or a combined approach, what the auditor needs to do?
• The auditor needs to
o ________ the risks.
o ______ the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
o ________ whether the risks are so significant that they could result in a material misstatement of the financial statements.
o _________ the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
When performing either a substantive approach or a combined approach, what the auditor needs to do?
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
When performing either a substantive approach or a combined approach, what the auditor needs to do?
When performing either a substantive approach or a combined approach, what the auditor needs to do?
• The auditor needs to
o Identify the risks.
o Relate the identified risks to the types of potential misstatements that could occur at the relevant assertion level.
o Consider whether the risks are so significant that they could result in a material misstatement of the financial statements.
o Consider the likelihood (probability) that the identified risks could result in material misstatements on the financial statements.
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should _____ the operating effectiveness of controls (TofC)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should __________________________________.
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
What the auditor should do
if the risk assessment is based on an expectation that controls are operating effectively?
What the auditor should do
if the risk assessment is based on an expectation that controls are operating effectively?
The auditor should test the operating effectiveness of controls (TofC)
What the auditor should do if the auditor expect that controls are operating effectively?
What the auditor should do if the auditor expect that controls are operating effectively?
The auditor should test the operating effectiveness of controls (TofC)
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should _____ the operating ____________ of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
If the risk assessment is based on an expectation that controls are operating effectively,
the auditor should test the operating effectiveness of controls (TofC)
that have been determined to be suitably designed to prevent or detect material misstatements.
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inad_______ / Ine________/ w____.
o Auditor believes that performing extensive sub________ procedures is likely to be more cost effective than performing tests of controls.
(Cost/benefit – inefficient).
The risk assessment may NOT include an expectation that controls operate effectively when (Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing extensive substantive procedures is likely to be more cost effective than performing tests of controls.
(Cost/benefit – inefficient).
The risk assessment may NOT include an expectation that controls operate effectively when
(Substantive approach):
o Controls appear ____________________.
o Auditor believes that performing
extensive substantive procedures = more cost effective
than performing tests of controls.
The risk assessment may NOT include an expectation that controls operate effectively when
(Substantive approach):
o Controls appear inadequate / Ineffective/ weak.
o Auditor believes that performing
extensive substantive procedures is likely to be more cost effective
than performing tests of controls.
(Cost/benefit – inefficient).
If the controls appear effective, ______ of controls will be performed
when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective) or
• When substantive procedures alone do not provide sufficient audit evidence.
If the controls appear effective, tests of controls will be performed
when (Combined approach):
• The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively (Cost effective) or
• When substantive procedures alone do not provide sufficient audit evidence.
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide _____________________.
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
If the controls appear effective, ______________ will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
If the controls appear effective, ______________ will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When _____________________ alone do not provide sufficient audit evidence.
If the controls appear effective, tests of controls will be performed when (Combined approach):
• When substantive procedures alone do not provide sufficient audit evidence.
The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of ________________ is lower if the control operates effectively
(Cost effective)
The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively
(Cost effective)
The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control _________________
(Cost effective)
The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively
(Cost effective)
The auditor’s risk assessment includes an __________ of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively
(Cost effective)
The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively
(Cost effective)
Effective Control = _____ Material Misstatement
YES – RMM Lower (Combined Approach)
NO – RMM Higher (Sub Approach)
Effective Control = Lower Material Misstatement
YES – RMM Lower (Combined Approach)
NO – RMM Higher (Sub Approach)
The auditor’s risk assessment includes an expectation of operating effectiveness of controls
because the likelihood of material misstatement is lower if the control operates effectively
(Cost effective)
Inadequate / Ineffective/ Weak Control = H____ Material Misstatement
YES – RMM Lower (Combined Approach)
NO – RMM Higher (Sub Approach)
Inadequate / Ineffective/ Weak Control = Higher Material Misstatement
YES – RMM Lower (Combined Approach)
NO – RMM Higher (Sub Approach)
Inadequate / Ineffective/ Weak Control = Higher Material Misstatement
Inadequate / Ineffective/ Weak Control = Higher Material Misstatement
When the decision to perform tests of controls will be made?
When the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures
is likely to be more ____ effective than performing more extensive substantive procedures.
The decision to perform tests of controls will be made
when the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures
is likely to be more cost effective than performing more extensive substantive procedures.
When the decision to perform tests of controls will be made?
When the auditor believes that a combination of __________ and a decreased scope of _________________
is likely to be more cost effective than performing more extensive substantive procedures.
When the decision to perform tests of controls will be made?
When the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures
is likely to be more cost effective than performing more extensive substantive procedures.
When the decision to perform tests of controls will be made?
The decision to perform tests of controls will be made
when the auditor believes that a combination of tests of controls and a decreased scope of substantive procedures
is likely to be more cost effective than performing more extensive substantive procedures.
Tests of controls alone are not normally _________ upon which to base an audit opinion.
Tests of controls alone are not normally sufficient upon which to base an audit opinion.
Tests of _______ alone are not normally sufficient upon which to base an audit opinion.
Tests of controls alone are not normally sufficient upon which to base an audit opinion.
The overall approach
• Identify ________ that are relevant to specific assertions that are likely to prevent or detect material misstatements,
and
• Perform tests of controls to evaluate the effectiveness of those _________.
The overall approach
• Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements,
and
• Perform tests of controls to evaluate the effectiveness of those controls.
The overall approach
• Identify controls that are relevant to specific ____________ that are likely to prevent or detect material misstatements,
and
• Perform tests of controls to evaluate the ____________ of those controls.
The overall approach
• Identify controls that are relevant to specific assertions that are likely to prevent or detect material misstatements,
and
• Perform tests of controls to evaluate the effectiveness of those controls.
For an entity that might have a tendency to _____STATE results the auditor will be concerned about:
o Occurrence
o Cutoff
o Accuracy
o Classification
For an entity that might have a tendency to OVERSTATE results the auditor will be concerned about:
o Occurrence
o Cutoff
o Accuracy
o Classification
For an entity that might have a tendency to _____STATE results for the purpose of avoiding taxation, the auditor will be concerned about:
o Completeness
o Cutoff
o Valuation
For an entity that might have a tendency to UNDERSTATE results for the purpose of avoiding taxation, the auditor will be concerned about:
o Completeness
o Cutoff
o Valuation
