ACT 4497 Lecture ch05

ACT 4497 Lecture ch05 - Assurance Services and the...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Assurance Services and the Integrity of th Modern Auditing: Modern Auditing: Financial Reporting, 8 Edition California Polytechnic State University at San Luis Obispo William C. Boynton Portland State University Raymond N. Johnson Chapter 5 – Overview of the Financial Statement Audit Chapter 5 Overview Chapter 5 Overview Financial Statements Financial Statements • • • • Balance Sheet Statement of Income Statement of Cash Flows Statement of Stockholders’ Equity or Statement of Retained Earnings Balance Sheet Balance Sheet • Classified Balance Sheet • Know it Statement of Income Statement of Income • Multi­step Income Statement • Know it. Statement of Cash Flows Statement of Cash Flows • From Operations • Investing Activities • Financing Activities • Can you prepare it? Overview of the Audit Process Overview of the Audit Process Overview of the Audit Process (cont.) Overview of the Audit Process (cont.) Phase I ­ Perform Risk Assessment Phase I ­ Perform Risk Assessment Procedures • Identify Relevant Financial Statement Assertions – Existence or Occurrence – Completeness – Rights and Obligations – Valuation or Allocation – Presentation and Disclosure Phase I ­ Perform Risk Assessment Phase I ­ Perform Risk Assessment Procedures • Understand the Entity and its Environment – Industry, Regulatory Environment, and Other External Factors – Nature of Entity, Including Accounting Policies – Objectives, Strategies, and Business Risks – Management and Review of Financial Performance Phase I ­ Perform Risk Assessment Phase I ­ Perform Risk Assessment Procedures • Make Decisions About Materiality – Based on professional judgment – Guides auditor in evaluation • Perform Preliminary Analytical Procedures – Study of plausible relationships – Identification of potential misstatements Phase I ­ Perform Risk Assessment Phase I ­ Perform Risk Assessment Procedures • Identify Risks – Audit Risk Model Phase I ­ Perform Risk Assessment Phase I ­ Perform Risk Assessment Procedures • Identify Risk – Risk of Fraud Phase I ­ Perform Risk Assessment Phase I ­ Perform Risk Assessment Procedures • Develop Preliminary Audit Strategies • Understand Internal Control – Identify types of potential misstatements – Consider factors that affect risk of material misstatement – Design audit procedures Phase II – Assess the Risk of Material Phase II – Assess the Risk of Material Misstatement • Relate Risk to Potential Misstatements – Assertion Level Risks – Financial Statement Level Risks • Determining the Magnitude of Potential Misstatements • Considering the Likelihood of Material Misstatements • Significant Inherent Risks Phase III – Respond to Assessed Risks Phase III – Respond to Assessed Risks • Staffing and Supervision • Nature of Audit Tests – Risk Assessment Procedures – Tests of Control – Substantive Tests Substantive Tests Substantive Tests • Initial Procedures • Substantive Analytic Procedures • Tests of Details of Transactions • Tests of Details of Balances • Tests of Details of Accounting Estimates • Tests of Details of Disclosures Phase III – Respond to Assessed Risks Phase III – Respond to Assessed Risks • Timing of Audit Tests • Extent of Audit Tests • Responding to Significant Inherent Risks Phase IV – Perform Further Audit Phase IV – Perform Further Audit Procedures • Further Risk Assessment Procedures • Tests of Controls • Substantive Tests Phase V – Evaluate Evidence Phase V – Evaluate Evidence • Reevaluate Risk Assessment Procedures • Determine the Significance of Findings • Form and Document Conclusions Phase VI – Communicate Audit Findings Phase VI – Communicate Audit Findings • The Auditor’s Opinion • Other Required Communications • Other Assurance Service Findings ...
View Full Document

Ask a homework question - tutors are online