Additional steps assess business risks establish

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and preliminary engagement activities. Additional steps: Assess business risks. Establish materiality. Consider multi-locations. Assess the need for experts. Consider non-compliances with laws and regulations. Identify related parties. Consider additional value-added services. Document the overall audit strategy and audit plan.
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Assess Business Risks To understand the entity’s business and transactions To identify financial statement accounts likely to contain misstatements By understanding the entity’s business and identifying where misstatements are likely to occur, the auditor can allocate more resources to investigate more risky accounts. 3-13
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Establish overall materiality Establish performance materiality for accounts Establish performance materiality for disclosures Establish Materiality
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Consolidated Financial Statements High Risk Moderate Risk Consider Multi-Locations or Business Units Low Risk The auditor correlates the amount of audit attention devoted to the location or business unit with the level of risk present.
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Assess the Need for Experts A major consideration in planning the audit is the need for an auditor’s expert. The presence of complex information technology may require the use of an IT expert. What other types of experts might be needed?
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Consider Non-Compliance with Laws and Regulations Non-Compliance Direct and Material Consider laws and regulations as part of audit Material and Indirect Be aware may have occurred; investigate if brought to attention
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Consider Non-Compliance with Laws and Regulations Table 3–3 Information or Circumstances that May Indicate Non-Compliance
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Related Parties Some examples from IAS 24 Related Party Disclosure Parents and subsidiaries. Significant influence. Joint control. Associate entity. Joint venture. Management. Close family of the principal owners & management. Other parties that can have significant influence. Sources of Information on Related Parties Minutes of meetings of those charged with governance. Conflict-of-interest statements. Financial and reporting information provided to creditors, investors and regulators Contracts or other agreements with major customers, vendors and management. Contracts or other agreements representing significant unusual transactions.
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Additional Value-Added Services Tax Planning Transaction Support IT- consultancy Internal Reporting Processes Benchmarking Risk Assessment Auditors are limited in the types of consulting services that they can offer their audit clients.
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Document Overall Audit Strategy and Audit Plan Auditors ensure they have addressed the risks they identified by documenting the linkage from the entity’s business
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