Kế toán, kiểm toán - Chapter 6: Planning the audit; linking audit procedures to risk

Name of the entity

Management responsibilities

Financial statements

Establishing effective internal control over financial reporting

Compliance with laws and regulations

Making records available to the auditors

Providing written representations at end of the audit, including that adjustments discovered by the auditors and not recorded
to the financials are not material

Auditor responsibilities

Conducting an audit in accordance with GAAS

Obtaining an understanding of internal control to plan audit
and to determine the nature, timing and extent of procedures

Making communications required by GAAS

 

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Planning the Audit; Linking Audit Procedures to RiskChapter 6 Items Included in Engagement LettersName of the entityManagement responsibilitiesFinancial statementsEstablishing effective internal control over financial reportingCompliance with laws and regulationsMaking records available to the auditorsProviding written representations at end of the audit, including that adjustments discovered by the auditors and not recorded to the financials are not materialAuditor responsibilitiesConducting an audit in accordance with GAASObtaining an understanding of internal control to plan audit and to determine the nature, timing and extent of proceduresMaking communications required by GAAS2Engagement Letters--Optional ItemsArrangements regardingConduct of the audit (e.g., timing, client assistance)Use of specialists or internal auditorsObtaining information from predecessor auditorsFees and billingOther services to be provided, such as examination of internal control over financial reportingLimitation of or other arrangements regarding liability of auditors or clientConditions under which access to the auditors’ working papers may be granted to others3 Audit PlanningDecide whetherto accept the prospective clientObtain knowledge of client’s businessand environmentMake preliminaryarrangements with the clientPrepare the engagement letter Assess risks of material misstatement,including fraud riskPrepare the audit plan, preliminary program, and time budget4Understanding the Client’s Business—Nature of the ClientCompetitive positionOrganizational structureAccounting policies and proceduresOwnershipCapital structureProduct and service linesCritical business processesInternal control5Understanding the Client’s Business—Industry, Regulatory, and Other FactorsCompetitive environmentSupplier and customer relationshipsTechnology developmentsMajor laws and regulationsEconomic conditions6Understanding the Client’s Business—Attractiveness of the IndustryBarriers to entryStrength of competitorsBargaining power of suppliers of raw materials and laborBargaining power of customers7Understanding the Client’s Business—Objectives, Strategies & Business RisksObjectives—Overall plansOperating and financial strategies—Operational actions to achieve objectivesBusiness risks—Threats to achieving objectives8Understanding the Client’s Business--Basic StrategyProduct differentiationCost leadership9Understanding the Client’s Business—Measuring and Reviewing PerformanceBudgetsKey performance indicatorsSegment performance reportsBalanced scorecardExternal parties10Sources of InformationInquiries of managementIndustry Accounting and Auditing GuidesIndustry Risk AlertsGovernment publicationsPrior company annual reports and SEC filingsPrior tax returnsElectronic sourcesTour of plant and officesAnalytical procedures11Developing an Overall Audit Strategy Planning materialityAssessing inherent risks, including fraud risksPreliminary assessment of control risk12Assessing Fraud RisksTwo typesFraudulent financial reporting (management fraud)Misappropriation of assets (defalcations)Procedures to assess fraud risksDiscussion among engagement teamInquiries of management and other personnelPlanning analytical proceduresConsidering fraud risk factorsIncentivesOpportunityAttitude13Assessing Fraud Risks—Identifying Fraud RisksConsiderations in identifying fraud risksType SignificanceLikelihood that it will result in a material misstatementPervasiveness 14Responding to Fraud RisksOverall responseProfessional skepticism and audit evidenceAssigning personnel and supervisionAccounting principlesPredictability of auditing proceduresAlterations in audit proceduresMore reliable evidenceShifting timing to year endIncreasing sample sizesResponse to the possibility of management overrideExamining journal entriesReview accounting estimates for biasesEvaluating the business rationale for significant unusual transactions15Consideration of Fraud Throughout the AuditEvaluating the results of audit testsDiscovery of fraudCommunication to appropriate level of managementIf fraud involves senior management or material misstatement communicate to audit committee16Objectives of Substantive Programs for Asset AccountsEstablish the existence of assetsEstablish that the company has rights to the assetsEstablish the completeness of recorded assetsDetermine the appropriate valuation of the assetsDetermine the appropriate financial statement presentation and disclosure of the assets17Transactions Affecting Accounts Receivable1819Direction of Audit Testing20The Audit ProcessObtain an understanding of the client and its environment, including internal controlIdentify and assess inherent risks of material misstatement, including fraud risksDetermine the planned assessed level of control risk and design additional tests of controls and planned substantive testsPerform additional tests of controlsReassess control risk and modify planned substantive testsPerform substantive tests and complete the auditForm an opinion and issue the audit report21

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