ACCG340 Final: 2
19 Jun 2018
School
Department
Course
Professor
1"
"
WK 2
Planning the audit
1. Relationship between accounting and auditing
2. The audit process
2"
"
a) Pre-engagement activities: acceptance & continuance of client relationships
b) Planning the audit - ASA300
i. Adequate planning helps ensure:
1. appropriate attention is given to important areas of the audit
2. problems are identified and resolved early
3. audit is performed in an effective and efficient manner
4. selection of appropriate engagement team members
ii. Planning stage includes:
1. Establishing overall audit strategy
Sets scope, timing and direction of the audit and guides development of audit
plan (Refer ASA300.Appendix 1 for detailed examples of matters to consider)
2. Developing an audit plan
Nature, timing and extent of planned further audit procedures
iii. Steps in the planning process
1. Obtain knowledge of the business
2. Appraisal of risks
a) Overview of the audit risk model
i. DEFINITION: Audit risk is the risk that the auditor will give an
inappropriate audit opinion when the financial report is materially
misstated. It is set by audit partner, 1-3% roughly.
ii. Before issuing an opinion on the financial report, the auditor needs
to reduce audit risk to an acceptable level (impossible to reduce to
zero) to ensure the opinion is reliable.
b) Audit risk and its 3 components
Document Summary
Planning the audit: relationship between accounting and auditing, the audit process (cid:50)(cid:84)(cid:71)(cid:15)(cid:71)(cid:80)(cid:73)(cid:67)(cid:73)(cid:71)(cid:79)(cid:71)(cid:80)(cid:86) (cid:50)(cid:78)(cid:67)(cid:80)(cid:80)(cid:75)(cid:80)(cid:73) (cid:37)(cid:81)(cid:78)(cid:78)(cid:71)(cid:69)(cid:86)(cid:75)(cid:80)(cid:73)(cid:2)(cid:67)(cid:80)(cid:70)(cid:2) (cid:37)(cid:81)(cid:79)(cid:82)(cid:78)(cid:71)(cid:86)(cid:75)(cid:81)(cid:80)(cid:2)(cid:67)(cid:80)(cid:70)(cid:2) (cid:71)(cid:88)(cid:67)(cid:78)(cid:87)(cid:67)(cid:86)(cid:75)(cid:80)(cid:73)(cid:2)(cid:71)(cid:88)(cid:75)(cid:70)(cid:71)(cid:80)(cid:69)(cid:71) (cid:84)(cid:71)(cid:82)(cid:81)(cid:84)(cid:86)(cid:75)(cid:80)(cid:73) Adequate planning helps ensure: appropriate attention is given to important areas of the audit, problems are identified and resolved early, audit is performed in an effective and efficient manner, selection of appropriate engagement team members. Planning stage includes: establishing overall audit strategy. Sets scope, timing and direction of the audit and guides development of audit plan (refer asa300. appendix 1 for detailed examples of matters to consider: developing an audit plan. Nature, timing and extent of planned further audit procedures. Steps in the planning process: obtain knowledge of the business, appraisal of risks, overview of the audit risk model. Definition: audit risk is the risk that the auditor will give an inappropriate audit opinion when the financial report is materially misstated. It is set by audit partner, 1-3% roughly.
