Lecture_05_S22009 - The University of Sydney ACCT3014...

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Week 5 Lecture c Analytical Procedures The University of Sydney ACCT3014 – Auditing and Assurance Semester 2, 2009 Additional Optional Reading : ICAA Audit Manual, pp. 90-91 and 237-240
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1. Pre-engagement activities 1.1 Accept / reject new client 1.2 Established terms of engagement 1.3 Engagement letter 2. Planning activities ASA 300 2.1 Obtain knowledge of the business 2.1.1 Preliminary analytical procedures ASA 520 2.2 Appraisal of risks, including fraud risk going concern 2.3 Estimate of materiality 2.4 Review of control components 2.4.1 Preliminary evaluation of control environment 2.5 Develop overall audit plan (i.e. develop an audit strategy) in response to risks 2.5.1 Determine reliance on internal controls 2.5.2 Determine extent and nature of testing 2.5.3 Write audit plan 2.6 Assignment of staff 3. Audit evidence ASA 500 3.1 Tests of control 3.1.1 Conducts tests 3.1.2 Make final evaluation of internal control 3.1.3 Modify audit approach 3.2 Substantive testing activities – ASA 500 3.2.1 Conduct substantive tests of transactions and balances 3.2.2 Conduct substantive analytical procedures - ASA 520 3.2.3 Evaluate results of substantive procedures 3.2.4 Modify audit approach 3.3 Obtain representations 3.3.1 Management 3.3.2 Solicitors 3.3.3 Bank 4. Opinion formulation and reporting activities 4.1 Review financial report ASA 520 4.5 Related party transactions 4.2 Review audit results 4.6 Formulate audit opinion 4.3 Subsequent events 4.7 Draft issue reports 4.4 Fraud and error 5. Continuous activities 5.1 Supervise conduct of examinations 5.2 Review work of assistants 5.3 Consider appropriateness of continuing relationship with client 5.4 Make required special communication 5.4.1 Material weaknesses of internal accounting control 5.4.2 Material errors or irregularities 5.5 Consult with appropriate persons in connection with special problems 5.6 Document work performed, findings, and conclusions in appropriate working papers 5.7 Consider going concern A U D I T P R O C E S S
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3 Analytical Procedures Analytical procedures may help to identify the existence of unusual transactions or events, and amounts, ratios, and trends that might indicate matters that have financial report and audit implications i.e. risks . For definition refer ASA 520, para. 7.
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4 Analytical Procedures Is the investigation and analysis of identified fluctuations and relationships to determine inconsistencies or deviations from predicted/ expected amounts .
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5 Analytical Procedures include: (ASA 520 paras. 8 and 9) c Comparison of information with comparable prior period information anticipated results (
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Lecture_05_S22009 - The University of Sydney ACCT3014...

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