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Week one particular
Aim of audit – enhance the degree of confidence of intended users in the financial report. Phrase of an thoughts and opinions by the auditor on whether – the FR is prepared, in all of the material values, in accordance with appropriate financial confirming framework. View – if the FR can be presented quite, in all material aspects, offer a true and fair view in accordance with the framework.
ASA require auditor to physical exercise professional judgment and maintain professional skepticism throughout the planning and satisfaction of the examine to Identify and assess risk of material misstatement, whether due to fraud or perhaps error, based upon an understanding in the entity and its environment, such as the entity’s internal control.
Get sufficient ideal audit proof about whether material misstatement exist, through designing and implementing ideal responses for the assessed hazards. Audit method (planning, taxation evidence, review reporting)
1 . Planning
Understanding the organization and determining risk
Assessment from the internal controls
Determining ‘significant risks’ for which unique audit interest needs to be centered 2 .
Evidence gathering
Tests of regulates
Substantive tests
3. Formation of the examine opinion
Planning
Risk identification
what approaches/ procedure the auditor needs to adopt to lessen audit risk. Plan- so that audit will be performed within an effective way. Key involvement team members in the planning appropriate quality control methods
Consideration of side by side comparisons of the entity’s financial info: Comparable information for before periods Anticipated results of the entity Similar industry details
Audit Risk- the risk of materials misstatement of financial report Assertion level
Inherent Risk (IR) the susceptibility (感受性) of your assertion(主张) to material misstatement, assuming you will find no related controls, IRGI factors are generally business risks (BR) affecting a specific accounts assertion. Control Risk (CR)
the risk of an assertion being materially misstated because regulates will not stop, or identify and correct problems on a timely basis. CRYSTAL REPORTS is the effect of the presence or a shortage of effective inside control built to mitigate entity’s business risk
Detection Risk (DR)
the risk the auditor will not detect the fabric misstatement. Could be reduced by proper organizing, assignment of staff, specialist scepticism (疑问), supervision and review
Organizing Materiality
ASA320 Substantialness – zero specific requirements for identifying materiality, but instead considers it a matter of professional thinking. Determining materiality for planning- 2 levels
1 ) An appropriate benchmark need to be chosen
2 . Risk examination based on auditor’s knowledge of patient’s business
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