Overview of the audit process

Question 1

What is the audit process? (UNDER AICPA OF A PRIVATE COMPANY)

Answer 1

I/C Review & Evaluation

1) Audit planning (risk assessment, pre-planning)
2) Review & Prelim Evaluation (review and preliminary evaluation of internal controls, how do those look on paper)
3) Tests of control (re-eval)- sometimes we do test, sometimes we don’t. We always have to assess the design of the internal controls, are they actually working? Sometimes under AICPA we don’t have to.

Substantive Tests:

4) Analytical procedures: Every material element of the F/S we have to perform substantive procedures
5) Test of Details

6) Audit Report

Question 2

What is the difference between the AICPA process of a private company versus a PCAOB standard of public company?

Answer 2

The process would be integrated (internal controls AND the Financial Statements)

We would be required to perform test of controls