Ch.9 Approach Flashcards
Technical Competencies:
- Assesses issues related to the undertaking of the engagement or project
Technical Competencies:
- Assesses issues related to the undertaking of the engagement or project
What is the last step of the audit planning stage?
Establishing the overall audit approach, setting the scope, timing, and direction of the audit. They will also need to select an approach to assess RMM at the OFSL and Assertion level.
What does CAS 330 detail?
Provides guidance on designing and implementing a response to assessed RMM and defined substantive procedures and tests of controls
Substantive procedures
An audit procedure designed to detect material misstatements at the assertion level. Substantive procedures comprise:
- ToD (of classes of transactions, account balances, and disclosures)
- substantive analytical procedures
Test of controls
An audit procedure designed to evaluate the operating effectiveness of controls in preventing, or detecting and correcting, material misstatements at the assertion level.
What is inherent risk?
the likelihood of material misstatement due ot the particular characteristics of the relevant class of transactions, account balances, or disclosure - CAS 330.7(a)
What is control risk?
The risk that relevant controls are not operating effectively and will not prevent or detect a material msistatement
What is a substantive approach to an audit?
There is no reliance on the operating effectiveness of controls - only substantive procedures are performed.
This is selected when a financial reporting systems or internal controls over financial reporting are either not reliable or have not yet been established or implementing.
What does CAS 315 state when performing a substantive approach in an audit?
Even though internals are not relied on, the practitioner must still gain the minimum necessary knowledge of the client’s system of internal controls in accordance with CAS 315
What is a combined approach?
Considers the operating effectiveness of controls and whether or not the operating effectiveness of controls can be relied to reduce detection risk.
Why are there special considerations to audits to groups of companies?
It is not always practical to visit all locations where there are subsidiaries. You need to identify what components are significant (financially or of nature/circumstance) to audit.
What are component auditors?
They are audit teams in various locations that may be able to test different locations on your behalf. But it should not be used unless required by law or regulation.
