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Day_5_web - AFM 451 1 What is your conclusion? What tests...

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Unformatted text preview: AFM 451 1 What is your conclusion? What tests will you conduct? W h a t i s y o u r c o n c l u s i o n ? W h a t t e s t s w i l l y o u c o n d u c t ? W h a t i s y o u r p l a n ? Who is your client? Client & their Financial Statements P r o fe s s io n a l J u d g m e n t P r o f e s s i o n a l J u d g m e n t Professional Judgment P r o f e s s i o n a l J u d g m e n t P ro fe s s io n a l J u d g m e n t P r o f e s s i o n a l J u d g m e n t P r o f e s s i o n a l J u d g m e n t P r o f e s s i o n a l J u d g m e n t W h a t a u d i t r e p o r t w i l l y o u i s s u e ? I n t e r n a l c o n t r o l s & B a l a n c e s N a t u r e , T i m i n g , E x t e n t AFM 451 2 The four phases of an audit The four phases of an audit III. Perform analyt- ical procedures and tests of details of balances. IV. Complete the audit and issue an audit report I. Plan and design an audit approach. II. Perform tests of controls. AFM 451 3 Other Aspects of Other Aspects of Understanding the Business Understanding the Business • First-time audits require more work. • Audit efficiency can be realized by working in tandem with the internal auditors. • Analysis of client financial statements and ratios contribute a significant understanding of the business. • The auditor must determine any need for spets on the audit. AFM 451 4 Terms of the Engagement Terms of the Engagement HB 5110 HB 5110 ■ Need engagement letter to ensure no misunderstanding (5110.02) ■ Establish objectives, scope and limitation (.08) ■ Establish the responsibilities of the auditor (.13) ■ Establish the responsibilities of management (.18) AFM 451 5 Management responsibility Management responsibility The operation of an entity are controlled by management under the direction of those charged with governance , Management has the primary responsibility for the accurate recording of transactions and the preparation of F/ S in accordance with GAAP. AFM 451 6 Management’s responsibilities Management’s responsibilities How does management carry out their responsibility for the accurate recording of transactions and the preparation of F/S in accordance with GAAP?- adopting sound accounting policies- maintaining adequate internal controls- ensuring fairness of F/S HB 5090 AFM 451 7 After an audit has been conducted (and even if the auditor has been involved in the form & content of F/S), the F/S remain the representation of management & those charged with governance . AFM 451 8 Auditor’s Responsibilities Auditor’s Responsibilities Perform audit according to GAAS The auditor should plan and perform an audit...
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This note was uploaded on 11/23/2009 for the course AFM 480 taught by Professor Gb during the Spring '09 term at Waterloo.

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Day_5_web - AFM 451 1 What is your conclusion? What tests...

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