Chapter 3: Process of assurance- Planning Flashcards
1
Q
Audit Strategy Vs Audit plan?
A
Audit strategy- A high level plan. E.g. scope, timing
Audit plan- Details. e.g. who will test
2
Q
How to obtain an understanding of the entity?
A
- Enquire of management
- Analytics procedurers
- Prior knowledge of the client
- Discussion amongst the audit team
3
Q
What are the 2 ways of identifying materiality?
A
1) Nature
2) Size
4
Q
What is performance materiality?
A
Materiality for the company
5
Q
Audit risk =
A
Inherent risk X control risk X detection risk
6
Q
What is inherent risk and the 3 types?
A
Wrong figures in the FS prior to audit:
1) Industry level
2) Entity level
3) Balance level
7
Q
What is control risk?
A
Risk that the MM cannot be detected by internal control systems.
8
Q
What is detection risk?
A
Risk that audit procedures will not detect MM.
