Ch. 9 Approach

Question 1

Audit approach

Answer 1

last step in the planning stage
sets the scope, timing, and direction of the audit
select an approach to address RMM on an assertion basis for each account
what lead to the RMM? IR or CR

Question 2

2 types of the audit approach

Answer 2

1. substantive audit approach - focuses solely on substantive procedures
2. combined approach - focuses on both test of controls and substantive procedures

Question 3

CAS #?

Answer 3

CAS 330
guidance on designing and implementing a response to assessed RMM and defines substantive procedures and tests of controls

Question 4

Substantive approach

Answer 4

no reliance on the operating effectiveness of controls
financial reporting system or controls over financial reporting are either not reliable or have not yet been established and implemented
CR=high

Question 5

Combined approach

Answer 5

both tests of controls and substantive procedures are performed, used when only substantive testing isnt enough
330.8 -> tests of controls should be performed to obtain sufficient audit evidence -> controls are operating effectively = CR low

Question 6

Special considerations

Answer 6

audits of groups of companies -parent company and several consolidating subsidiary companies
understand a group and all its components
significance of a component:
• its financial significance to the group
• its specific nature or circumstances (whether it may contain significant RMM, impacting the group)
CAS 600