Corroborate internal audit testing for example

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Corroborate internal audit testing, for example, selected test of the  same controls to validate the results achieved by internal control Test controls Assess control risk for each relevant assertion and for importance  classes of transactions and account balances Controls must assure that all transactions that occurred have been  recorded Evaluate and test key controls Potential outcomes of control testing Consider the results of control testing Deficiencies identified Significant deficiencies Material weaknesses Reassess control risk and perform substantive testing Consider account balances likely to contain misstatement Subjective estimates Nonstandard and large adjusting entries Size (materiality) of the account Residual risk: the probability that an account balance might be  misstated after processing and the application of internal controls Consider the nature of misstatements and efficiency of planned audit tests Conduct substantives tests Substantive tests Direct tests of balances Factors affecting extent of direct testing to be performed Audit evidence factors Auditor assessment Effect on direct testing performed Audit risk Low More direct testing Business risk High More direct testing Subjectivity of accounting High More direct testing
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process Materiality of account balance Highly material account More direct testing Effectiveness of internal control as assessed by management and the auditor Internal controls are effective Less direct testing Evidence form tests of other accounts Directional tests indicate low risk of misstatement Less direct testing
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Audit Evidence: A Framework 15:19 Overview of audit model Obtain and evaluate evidence concerning assertions Consider risk, types of evidence available, reliability of evidence  Reminder of third standard of fieldwork o Sufficient, competent evidence is to be obtained Source of audit evidence o Knowledge of business and industry o Tests of controls o Direct tests of account balances and transactions o Analytical procedures Assertion model for financial statement audits Audit program is designed around assertions The procedures to gather audit evidence to test the underlying assertions Primary assertions are embodied in the financial statement o Existence and occurrence The assets, liabilities and equity interests exist o Completeness  All assets should have been recorded have been recorded o Rights and obligations o Valuation and allocation     GAAP
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Audit Evidence: A Framework 15:19 o Presentation and disclosures Gathering sufficient, appropriate evidence Factors affecting the reliability of financial data Management integrity
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  • Spring '10
  • w
  • Financial audit

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