AFM202 Lecture Notes - Lecture 2: Audit Risk, Internal Control, Audit Evidence

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM202
• Professor: Alan Mc Naughton

Document Summary

Who is responsible for what: preparer (client, cas 200. 4, preparation of the financial statements, relevant to the users, to make decisions, reliable, comparable, year to year and between companies, understandable. Fairly present according to the rules: management and those charged with governance in relation (board of directors) to financial reporting, cas 200 a. 2. Sufficient appropriate audit evidence: propose adjustments to financial statements, ethical requirements, professional judgement and skepticism, due care, 200 a. 28, audit risk. Sufficient evidence: professional skepticism, attitude that includes a questioning mind, being alert to conditions that may indicate possible material misstatement due to fraud and error, critical assessment of audit evidence. Preliminary understanding of auditee"s business, environment and risks: why, assess the risk that f/s might contain material misstatements, how, gain an understanding of the client. Identify significant accounts: set materiality, understand internal controls, develop an audit strategy. Levels of understanding and risk assessment: entity level, what to research.