Domain 1 IA Operations - Audit Process Flashcards
What are the 5 phases of the audit process?
1) Preliminary survey
2) Audit program
3) Fieldwork
4) Reporting
5) Monitoring and follow up
What is the end product of the audit process?
The audit report
Name the 3 overall audit areas that the audit process linked to
Preaudit
During the audit
Post audit
Audit Process: Preliminary survey - key concepts
- Major tools used: personal observation, physical inspection of equipment, review of documents, inquiries, flowcharts, analytical reviews and walkthroughs
- Activities typically performed:
1) Interview operating personnel
2) Identify auditee objectives
3) Identify standards used to evaluate performance
4) Assessing the risks inherent in audited operations
In what scenario should an auditor send a memo to all interested parties summarising the preliminary survey results and indicate that the audit has been cancelled?
When audit resources are limited and the results of the preliminary survey and limited audit testing reveal that an operating function is working as intended and no major deficiencies were noted.
What are the agenda items for discussion at a preaudit meeting?
Purpose and scope of audit
Records and auditee personnel needed
Expected starting and completion dates
Does not include sampling plan and key criteria.
When is the audit budget finalised?
After the preliminary survey
Audit Process: Audit Program - key concepts
- Audit procedures are developed to accomplish audit objectives (audit procedures describe which activities to review and which transactions to examine)
Audit Process: Fieldwork - Key Concepts
Involves examining records and evaluating information
Audit evidence is collected in this phase to draw audit conclusions
The effectiveness of controls are evaluated
Workpapers are prepared to document the results
If an auditor used an internal control questionnaire during he survey phase and received positive responses, he or she will confirm these responses in the fieldwork phase
Control status during the survey and fieldwork phases
In Preliminary survey phase, the existence of controls is determined
In the fieldwork phase, the effectiveness of controls is tested
In the fieldwork phase, the adequacy of controls is evaluated
Audit Process: Reporting - Key Concepts
Audit results are communicated to the auditee both orally and in writing with a clear and professional opinion rendered
An exit conference is conducted to review the audit reports with auditees
Audit Process: Monitoring & Follow up - Key Concepts
Each audit should include a firm basis for monitoring and follow-up actions, active status monitoring and a determination of the results of actions taken on recommendations
Auditee responses to the audit report are reviewed to assess their adequacy and timeliness and the appropriateness of the proposed corrective actions. Auditee responses and their corrective actions are monitored to ensure their timely completion.
Continued attention is required until expected results are achieved. At this point, audit recommendations are closed.
Audit recommendations should only be closed for one of the following 4 reasons….
1) recommendation was effectively implemented
2) An alternative action was taken that achieved intended results
3) Circumstances have so changed that the recommendation is no longer valid
4) Recommendation was not implemented despite the use of all feasible strategies (when a recommendation is closed for this reason a judgment is made on whether the objectives are significant enough to be pursued at a later date in another assignment.
Where does majority of the audit work take place?
In the fieldwork phase. - The audit work can be done either at headquarters (office) or at field offices.
Advantages and disadvantages of audit work at headquarters.
Advantages
1) More avenues to recruit new auditors
2) availability of qualified auditors due to location and ability to recruit auditors due to corporate name
3) Auditors with special skills can be hired
Disadvantages
1) HQ and auditors are not fam,Iliad with field office operations and people
2) Requires more travel time and expenses
3) Auditors will be away from home and family
4) Auditors will feel burned out
Advantages and disadvantages of audit work at field offices
Advantages
1) Reduction of travel time and expenses
2) Auditors will be familiar with local operations and people
Disadvantages
1) More expensive to operate a separate office
2) Lack of qualified auditors due to location
3) Lack of specific skills among the audit staff
4) Auditors will not be familiar with corporate culture
5) Auditors will not have mgt insight due to lack of ongoing contact
Activities during preaudit
Opening audit project Short term audit planning (scope, resources, objectives, timeframes) Entrance conference Preliminary survey Audit Program Development Application of CAAT Workpaper preparation
Activities during audit
Fieldwork Observations Testing Examinations Control Evaluations Interim written reports Interim oral reports Working paper preparation Application of CAATs Final audit report Correction of major findings
Activities during post audit
Exit conference Mgt (auditee) responses Correction of audit findings Monitoring of corrective actions Closing the audit project Auditor performance evaluation Customer satisfaction survey Project quality review (lesson learned) Follow up audit
Job duties of audit director
Selecting/approving project team members
Approving project resources
Attending entrance and exit conferences as needed
Determine need for expanded testing review summary audit findings
Monitor corrective action taken on reported findings
Conduct auditor performance appraisals
Obtain feedback from audit customers
Close the audit
Job duties of Audit Manager/Supervisor
Open an audit by approving audit budget Attend entrance and exit conferences Approve audit program Provide instructions to auditors Review audit work papers Ensure audit objectives are achieved Review draft audit report Develop follow up audit plans Conduct auditor performance appraisals Close audit
Job duties of audit team leader/auditor-in-charge
Allocate budgeted audit hours among assigned staff
Attend entrance and exit conferences
Prepare preliminary audit program
Review audit work papers and prepare review point sheet from a quality control viewpoint
Organise and draft audit report
Conduct auditor performance appraisals
Job duties of a staff/senior auditor
Conduct preliminary survey Develop audit program Attend entrance and exit conferences Execute audit program Collect audit evidence Prepare work papers Update permanent audit files Provide input to the draft audit report
