BUS 426 Lecture Notes - Financial Audit, Audit Evidence, Audit Risk

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 426
• Professor: Brad Bart

Document Summary

Key internal controls that may prevent or detect material misstatements are identified and evaluated. The strengths and weaknesses of the client"s control system are assessed to identify specific control risks in the client"s information systems and processes. Based on their assessment of control systems, auditors decide whether to test control procedures and to plan which other audit procedures to perform. Every financial statement audit includes the evaluation of internal control and an assessment of control risk. This work is done as part of the audit planning process. The entity"s internal control: the auditor shall obtain an understanding of internal control relevant to the audit. Although most controls relevant to the audit are likely to relate to financial reporting, not all controls that relate to financial reporting are relevant to the audit. It is a matter of the auditor"s professional judgment whether a control, individually or in combination with others, is relevant to the audit. (ref: para.