week 3: audit planning (phase 2)

Question 1

3 steps of the risk assessment process

Answer 1

1. gathering information about the entity
2. perform risk assessment procedures
3. use information to assess the risks of material misstatements

Question 2

obtaining an understanding of…?

Answer 2

1. entity and its environment
2. applicable financial reporting framework and accounting policies
3. entity’s system of internal control

Question 3

what are the 3 risk assessment procedures?

Answer 3

1. make inquiries
2. perform analytical procedures
3. observe and inspect

Question 4

why do we need to use the information to identify and assess RMM

Answer 4

to determine the nature, timing and extent of further audit process
enables the auditor to express an opinion on FS at an acceptably low level of audit risk

Question 5

what are some factors that affect the identification of appropriate benchmark

Answer 5

1. elements of FS
2. user’s primary focus
3. entity’s ownership structure
4. volatility of the benchmark