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Chap 1 Notes_Part_4 - We conducted our audit in accordance...

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How is an Audit Conducted? Chronology Plan and design audit approach Perform tests of controls and substantive tests of transactions Perform analytical procedures and tests of details of balances Complete the audit and issue an audit report PHASE 1 PHASE 2 PHASE 3 PHASE 4 Arens, Elder Beasley
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Planning Phase 1. Accept client & initial planning 2. Understand the client’s business and industry 3. Assess client business risk 5. Set materiality and acceptable audit risk 4. Preliminary analytical procedures 6. Develop overall audit plan and audit program Arens, Elder Beasley 6. Assess fraud risk
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© W.R. Knechel Independent Auditor’s Report To the Board of Directors: We have audited the accompanying balance sheet of ABC Company as of December 31, 2006, and the related statements of income, retained earnings and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
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Unformatted text preview: We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion , the financial statements referred to above present fairly , in all material respects, the financial position of ABC Company as of December 31, 2006, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. Smith & Company February 20, 2007 Audit risk, materiality; GAAS v. Judgment...
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Chap 1 Notes_Part_4 - We conducted our audit in accordance...

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