acquisition may be impaired affecting the fair presentation in the financial

Acquisition may be impaired affecting the fair

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acquisition may be impaired, affecting the fair presentation in the financial statements. Dr. Mohamed Elmaghrabi 11 12 Dr. Mohamed Elmaghrabi
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28/10/2018 4 Part 3: Assess client business risk Sarbanes-Oxley Act The Sarbanes-Oxley Act requires that management certify it has designed disclosure controls and procedures to ensure that material information about business risks is made known to them. It also requires that management certify it has informed the auditor and audit committee of any significant deficiencies in internal control. 13 Dr. Mohamed Elmaghrabi Part 4: Perform preliminary analytical procedures Auditors perform preliminary analytical procedures to better understand the client’s business and to assess client business risk. One such procedure compares client ratios to industry or competitor benchmarks provides an indication of the company’s performance Preliminary tests can reveal unusual changes in ratios. 14 Dr. Mohamed Elmaghrabi Summary of the parts of audit planning A major purpose of audit planning is to gain an understanding of the client’s business and industry, which is used to assess acceptable audit risk, client business risk and the risk of material misstatements in the financial statements. There are four additional parts of audit planning that are discussed in subsequent chapters. The four subsequent parts are: 1. Set materiality and assess acceptable audit risk and inherent risk (Chapter 9) 2. Understand internal control and assess control risk (Chapter 10) 3. Gather information to assess fraud risks (Chapter 11) 4. Develop an overall audit plan and audit program (Chapter 13) 15 Dr. Mohamed Elmaghrabi End of Lecture
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