Audit Planning Lecture PPT

Audit Planning Lecture PPT - Audit Planning Preliminary...

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Audit Planning
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Preliminary Auditing Planning Preliminary Auditing Planning Pre-engagement Arrangements ( Client selection and retention, Communication Between Predecessor and Successor Auditors, Engagement Letters, Staff Assignment, Time Budget) Preliminary Understanding of Auditee’s Business, Environment and Risks Preliminary Analytical Procedures for Audit Planning and to Management’s Draft Financial Statements Materiality Levels for Audit Planning Financial Statement Assertions and Audit Objectives Existence, Ownership (rights and obligations), Completeness, Valuation (measurement and allocation), Presentation (classification and disclosure) (PCOVE) Developing the Overall Audit Strategy (the nature, extent and timing of the audit procedures) Discuss CAS210- Terms of Engagement, CAS300 – Planning
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Pre-engagement Arrangements Client selection and retention Obtaining and reviewing financial information about prospective client. Evaluation of independence. Evaluation of competency and resources Communication Between Predecessor and Successor Auditors Ask if there are issues that should be considered in accepting the client. Obtain information from the predecessor auditor for planning the audit. Predecessor auditor is required by the rules of conduct to respond to the communication Engagement Letters engagement letter forms the contract for the audit. • Standards require the auditor and management to agree on the terms of the audit engagement. Staff Assignment, Time Budget CAS 300- Audit Planning, CAS 510 – Initial Audit Engagements
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Preliminary Understanding of Auditee’s Business, Environment and Risks It helps to assess the risk that financial statements might contain material misstatements. Used to establish and overall audit strategy, design the audit plan and audit programs. business and the economic environment national economic condition and policies, geographic location, developments in taxation and regulation, and specific industry characteristics
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Preliminary Analytical Procedures for Audit Planning and to Management’s Draft Financial Statements at the beginning of the audit when planning is taking place, and at the end of the audit when the partners in charge review the overall quality of the work and form an opinion Auditors look for relationships in accounts as indicators of problems and to plan further audit work (horizontal/ vertical analysis, yr over yr fluctuations, f/s relationships)
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Materiality is the largest amount of uncorrected misstatement that might exist in financial statements that still fairly present the company’s financial position and results of operations it affects every other planning, examination, and reporting decision Materiality is both a quantitative and a qualitative judgment intentional misstatements, intentional violations of the law, or
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This note was uploaded on 03/24/2012 for the course ACCOUNTING IAF taught by Professor Ganesh during the Spring '12 term at Seneca.

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Audit Planning Lecture PPT - Audit Planning Preliminary...

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