Chp05 - AuditEvidenceand Documentation Slide 5- 1...

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Slide 5- 1 Audit Evidence and  Documentation
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Slide 5- 2 The Third Standard  of Field Work Sufficient appropriate evidential matter is to obtained by performing audit procedures to afford a reasonable basis for an opinion regarding the financial statements under audit.
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Slide 5- 3 Management Assertions Embodied in the  Financial Statements Existence or Occurrence Existence or Occurrence- -Assets, liabilities, and owners’ equity accounts reflected in the financial statements exist; the recorded transactions have occurred. Completeness Completeness --All transactions, assets, liabilities, and elements of owners’ equity that should be presented in the financial statements are included. Rights and Obligations Rights and Obligations- -The client has rights to assets and obligations to pay liabilities that are included in the financial statements. Valuation or Allocation Valuation or Allocation- -Assets, liabilities, owners’ equity, revenues, and expenses are presented at amounts that are determined in accordance with generally accepted accounting principles. Presentation and Disclosure- -Accounts are described and classified in the financial statements in accordance with generally accepted accounting principles, and all material disclosures are provided. Accuracy – Amounts and other data relating to recorded transactions have been recorded properly. Cutoff – Transactions have been recorded in the proper accounting period.
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Slide 5- 4 Relationship of Financial Statement  Assertions and the Audit Management Assertions Audit Objectives Audit Evidence Audit Report on Financial Statements Financial Statements (GAAP) Audit Procedures
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Slide 5- 5 Audit Risk Risk of Material Risk that the Auditors Audit Risk = Misstatement * Fail to Detect the Misstatement = Inherent Control Detection Risk * Risk * Risk
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Inherent Risk The risk of a material misstatement occurring in an assertion assuming no related internal controls. Related to:
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Chp05 - AuditEvidenceand Documentation Slide 5- 1...

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