Audit Standards & Engagement Planning Flashcards
Standards of Fieldwork
PIE
Planning and Supervision
Internal Control
Evidence
PIE
Standards of Fieldwork
Planning and Supervision
Internal Control %
Evidence $
Standards of Reporting
CDOG Consistency - Implicit Disclosures - Implicit Opinion - Explicit GAAP
CDOG
Standards of Reporting Consistency Disclosures Opinion GAAP
General Standards
TIP
Training and Proficiency
Independence
Professional Care
TIP
General Standards
Training and Proficiency
Independence
Professional Care
Standards of GAAS
10 Standards
TIP
PIE
CDOG
Auditing Standards Vs Audit Procedures
Procedures relate to ACTS to be performed, Standards deal with MEASURES IN QUALITY
Statements on Auditing Standards (SAS)
2 Categories describe auditor’s responsibility
1) Unconditional Requirement: Must or Required (General, Fieldwork, Reporting standards include MUST)
2) Presumptively Mandatory: Should. Needs complied with, however, in rare circumstances may depart from requirement if document justification (Apply to both Public and Non-Public Audits)
Accepting Engagement
Audibility of financial statements
Management Integrity
Communication with Predecessor Auditor
RID-C Reasons for Change Integrity of Management Disagreements during audit Communication with Audit Committee
Matters Auditor MUST communicate with Audit Committee
oral or writing DISAPPROVE Disagreements with Management Illegal Acts Significant Accounting Policies Adjustments Prior Discussions with Management Problems Responsibilities Other Information Views of Other Accountants Estimates
Auditor’s Responsibilities
Conducting an Audit in accordance with GAAS
Informing client of any improvements in control or economy of operations
Client’s Responsibilities
Making available all records
Not limiting the scope of the auditor’s work
Paying the Fee based on agreed upon method
Engagement Letter
FACSIMLE
Written Communication IS Req
Engagement letter is NOT Req but is best
FACSIMLE
Engagement Letter Fees Auditor's Responsibility Scope & Nature of Engagement (Intro & Scope Paragraph) Internal Control Management's Responsibility Irregularities - Fraud Illegal Acts - Fraud Errors
Qualitative
What
Quantitative
How much
Audit Risk & Materiality
Inverse Relationship
Steps in Planning an Audit
BRAINSTOPS
Basic Discussions with Client
Review of Audit Documentation from previous audits
Ask about recent developments
Interim Financial Statements (performance of such analytical procedures is MANDATORY)
Non-Audit Personnel (to learn more about client)
Staffing for audit
Timing
Outside Assistance
Pronouncements on accounting principles
Scheduling with the Client
Supervision of an Audit
Instructing Assistants
Reviewing the Work Preformed
Dealing w/differences of opinion among firm personnel: Document difference and ask to be disassociated from the matter’s resolution
Audit Risk
Inherent Risk x Control Risk x Detection Risk
Risk of Material Misstatements (RMM)
IR x CR Inherent Risk (susceptibility w/o IC) Control Risk (IC structure will fail)
DR
TD (Test of Details Risk)
AP (Substantive Analytical Procedures Risk)
