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Lecture3 - Page 1 of 4 Week 3 Audit Objectives Planning and...

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Week 3: Audit Objectives, Planning, and Evidence - Lecture Planning the Audit Introduction | Planning the Audit | Segregation of Duties | Gathering Evidence | Analytical Procedures and the Audit | Practice Exercise The planning stage of the audit is a perfect opportunity for the CPAs to meet the client management and their staff. Getting to know the client's business during a face-to-face meeting in the field and planning how the audit will proceed is a significant event that lays the groundwork for a successful audit. The audit staff will interview key people in the various departments to determine how the department operates and what internal controls are in place. Tests will later be performed on those internal controls to determine the success or failure of the controls represented. TCO G, regarding analytical procedures, is the next key area we review. The audit will also start the process of performing analytical procedures to determine the testing of various accounts as TCO F directs. These procedures are necessary at various stages of the audit and serve the purpose of giving the auditor a basis from which to proceed. The primary objective of an audit is to express an opinion on the financial statements. The client’s management asserts that the financial statements are complete; that all recorded assets and liabilities are the rights and obligations of the business; that there has been proper valuation or allocation of amounts; that during the accounting period all components of the statements existed or occurred; and that they have been properly classified and disclosed. Planning the audit will entail inquiries of any predecessor auditor. Matters to be discussed should cover such things as reasons for the change in auditors, disagreements over accounting principles, internal control issues, fraud, and illegal acts and whether they were communicated to the audit committee. Preliminary meetings with the client give the auditor and client an opportunity to have an understanding of the Print This Page Introduction Planning the Audit Page 1 of 4 7/28/2011 http://vizedhtmlcontent.next.ecollege.com/(NEXT(82d98eaa7e))/Main/CourseMode/Vized...
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