Audit Process and Opinions

Question 1

1st step?

Answer 1

Accept audit engagement

Question 2

2nd step?

Answer 2

Understand the entity and its environment

Question 3

3rd step?

Answer 3

Assess the risk of material misstatement

Question 4

4th step when effective controls are expected?

Answer 4

Tests of controls

Question 5

4th step when effective controls aren’t expected?

Answer 5

Communicate deficiencies

Question 6

If test of controls prove to be unsatisfactory (Step 5)?

Answer 6

Communicate deficiencies

Question 7

Test of controls prove to be satisfactory (Step 5)?

Answer 7

Reduced substantive procedures

Question 8

Step after communicate deficiencies (Step 5)?

Answer 8

Full substantive procedures

Question 9

Step after reduced substantive procedures and full substantive procedures (Step 6)?

Answer 9

Final review

Question 10

Steps after final review (Step 7)?

Answer 10

Report to management

Auditor’s report

Question 11

Financial statements are materially misstated. Material but not pervasive

Answer 11

Qualfiied opinion

Question 12

Financial statements are materially misstated. Material and pervasive

Answer 12

Adverse opinion

Question 13

Inability to obtain sufficient appropriate evidence. Material but not pervasive

Answer 13

Qualified opinion

Question 14

Inability to obtain sufficient appropriate evidence. Material and pervasive

Answer 14

Disclaimer of opinion