Overview of Audit Process

Question 1

List the four basic steps in the audit process.

Answer 1

1. )Planning
2. )Internal control consideration
3. )Substantive audit procedures
4. )Reporting

Question 2

What considerations should be given by the auditor regarding internal controls prior to beginning an audit or performing substantive audit procedures?

Answer 2

1. )Obtain the required understanding of the design of internal control for planning purposes.
2. )Perform tests of controls to evaluate operating effectiveness of internal control if contemplating reliance on specific controls.

Question 3

What are some considerations that must be given by the auditor during the planning phase of the audit?

Answer 3

1. )Determine whether to accept or continue the audit engagement
2. )Assess the risk of material misstatement
3. )Evaluate requirements for staffing and supervision
4. )Prepare the required written audit program (also called the audit plan).

Question 4

List the two types of substantive audit procedures.

Answer 4

1. )Analytical procedures

2. )Tests of details

Question 5

List the two types of test of details.

Answer 5

1. )Tests of ending balances

2. )Tests of transactions