Summary of Key ISAs Flashcards
ISA 200- objectives of the auditor
to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error
to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework
to report on the financial statements, and communicate as required by the ISAs, in accordance with the auditor’s findings
ISA 200- responsibilities of management
preparation of the financial statements in accordance with the applicable financial reporting framework, including their fair presentation
internal control necessary to enable preparation of financial statements that are free from material misstatement, whether due to fraud or error
to provide the auditor with:
- access to all information relevant to the preparation of the financial statements
- unrestricted access to persons within the entity from whom the auditor determines it necessary to obtain evidence
ISA 200- audit risk
the risk of issuing an inappropriate opinion
ISA 200- inherent risk
the susceptibility of an assertion about a class of transaction or account balance or disclosure to material misstatement before the consideration of any related internal controls
ISA 200- detection risk
the risk that audit procedures do not detect material misstatements
ISA 200- professional scepticism
an attitude that includes a questioning mind, being alert to conditions which indicate possible misstatement due to error or fraud and a critical assessment of audit evidence
ISA 200- inherent limitations of audit
audit evidence is persuasive rather than conclusive because of:
-the nature of financial reporting
-the nature of audit procedures
-the need to conduct an audit within reasonable time and at reasonable cost
ISA 210- the preconditions for an audit
the auditor must establish whether the preconditions for an audit are present:
- determine whether an acceptable financial reporting framework is to be applied in the preparation of the financial statements
- obtain agreement of management that it acknowledges and understands its responsibilities
ISA 210- contents of engagement letter
-objective and scope of the audit
-responsibilities of the auditor
-responsibilities of management
-identification of the applicable financial reporting framework
-expected form and content of any reports to be issued
ISA 230- objective of audit documentation
evidence of the basis for the independent auditors report
evidence that audit planned and performed in accordance with ISAs and legal/regulatory requirements
ISA 230- what should audit documentation enable an experienced independent auditor to do?
audit documentation should enable an experienced independent auditor with no previous connection to the audit to understand:
-nature, timing and extent of audit procedures performed
-results of audit procedures performed
-significant conclusions and professional judgments made in reaching those conclusions
ISA 240- objectives of the auditor relating to fraud
identify risks of material misstatement due to fraud
obtain sufficient appropriate evidence regarding assessed risks
respond appropriately to fraud or suspected fraud identified
ISA 240- fraud definition
an intentional act involving use of deception to obtain unjust/illegal advantage
ISA 240- two types of fraud
fraudulent financial reporting
misappropriation of assets
ISA 260- communication with those charged with governance
those charged with governance are those with responsibility for overseeing the strategic direction of the entity.
ISA 260- matters to be communicated to those charged with governance
auditors responsibility in relation to the fs audit
planned scope and timing of the audit
significant findings from audit
auditors independence (listed companies)
ISA 300- benefits of planning
helps the auditor to devote appropriate attention to important areas of the audit
helps identify and resolve potential problems on a timely basis
assists in the selection of a suitable audit team
helps the direction and supervision of the audit team
assists the auditor to perform an efficient and effective audit
ISA 300- content of audit strategy
characteristics of the engagement
reporting objectives (e.g. reporting timetable)
factors significant in directing the teams efforts
results of preliminary engagement activities
nature, timing and extent of resources
ISA 300- content of audit plan
nature, timing and extent of:
planned risk assessment procedures
planned further audit procedures at the assertion level
other planned procedures required to comply with ISAs
ISA 315- the components of the entity’s system of internal control
control environment
entity’s risk assessment process
the entity’s process to monitor the system of internal control
information system and communication
control activities
ISA 315- transactions and events and related disclosures assertions
occurrence
completeness
accuracy
cut off
classification
presentation
ISA 315- account balances and related disclosures assertions
existence
rights and obligations
completeness
accuracy
valuation and allocation
classification
presentation
ISA 320- materiality
misstatements, including omissions, are considered to be material if they, individually or in aggregate, could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements
ISA 320- performance materiality
an amount set at less than materiality for the FS as a whole, to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the FS as a whole.
ISA 265- matters to consider in determining whether a deficiency in internal control is significant
the likelihood of the deficiencies leading to material misstatements in the financial statements in the future
the susceptibility and complexity of determining amounts such as fair value accounting estimates
the susceptibility to loss or fraud of the related asset or liability
the financial statement amounts exposed to the deficiencies
the volume of activity that has occurred or could occur in the account balance or class of transactions exposed to the deficiency or deficiencies
the interaction of the deficiency with other deficiencies