Audit Procedures
Property
If the risk assessment shows that the client has…
An effective control environment:
allows the auditor to have more confidence in internal control and reliability of audit
evidence
overall
...
Audit Procedures
Property
If the risk assessment shows that the client has…
An effective control environment:
allows the auditor to have more confidence in internal control and reliability of audit
evidence
overall response could include some audit procedures being performed at an
interim date rather than at period end.
An ineffective control environment (Deficiencies Exist)
Require the auditor to perform additional work such as:
Assigning more experienced staff
Conducting audit procedures at year end rather than at interim dates
Obtaining more extensive audit evidence from substantive procedures
Making changes to the nature, timing, or extent of audit procedures to be
performed.
Financial Statement Assertions
Assertions made by management, explicit or otherwise
@July 10, 2022 9:07 PMAudit Procedures 2
Audit Procedures
The means for obtaining sufficient audit evidence to satisfy financial statement
assertions and support audit opinion on the fairness of the financial statements
Detailed instructions for the collection of a particular type of evidence that is to be
obtained during the audit
Audit Procedures are performed to gather necessary, but not all, corroborative
evidence to achieve audit objectives
Audit Standards - measure of quality of audit performance, set by the AASC, remain
the same from one engagement to another
Audit Procedures - performed to meet audit standards; determined by the auditor →
vary from audit to auditAudit Procedures 3
Audit Techniques - methods used by the auditor or the details of the audit
procedures → also vary from audit to audit
CATEGORIES OF AUDIT PROCEDURES
1. Risk Assessment Procedures → Evidence to support assessed risks
2. Overall Responses → to address assessed Risk of Material Misstatement at the FS
level
3. Further audit procedures → evidence that will reduce audit risk to acceptably low
level
An Appropriate Audit Approach
This will be based on the assessment of the identified risks at both the financial
statement level and the assertion level.Audit Procedures 4
Note: in smaller entities, reliable control activities may not exist or may be very limited.
In these cases, a primarily substantive approach may be the only alternative.
NATURE, TIMING, EXTENT OF AUDIT PROCEDURES
Nature refers to:
its purpose (i.e. test of controls or substantive procedures)
its type (i.e. inspection, observation, inquiry, confirmation, recalculation,
reperformance, or analytical procedures)
Timing
when to perform the audit procedure
period or date to which the audit evidence applies
Extent
quantity to be performed or the extent of testing
number of items to be examined
Audit Evidence
Audit evidence consists of underlying accounting records and corroborating evidence
UNDERLYING ACCOUNTING RECORDS
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