Volatility in proposed benchmark may need to reconsider if fluctuates widely

Volatility in proposed benchmark may need to

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• Volatility in proposed benchmark (may need to reconsider if fluctuates widely) • Also: Consider the need to ‘normalise’ the benchmark based for unusual or non-recurring items Materiality ISA 320 Setting the percentage % % risk of material misstatement risk of material misstatement audit procedures audit procedures
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Quick Reference Guide 8.1 Audit Risk Model and Audit Plan Audit & Assurance Chartered Accountants Program Page 1 of 1 Quick reference guide 8.1 – Audit Risk Model and Audit Plan Perform Tests of controls if: • Expect controls to be operating effectively • Can’t get sufficient appropriate audit evidence from substantive procedures alone Perform substantive procedures: To reduce DR to acceptable level • Must perform for each material class of transaction, account balance & disclosure (Either Substantive Analytical Procedures or Tests of Details) Consider performing Substantive Analytical Procedures if: • Controls are strong • When auditing accounts with high volumes of transactions X X = Type of procedure: RMM Audit Risk Model: Must perform tests of detail if: • significant risk Susceptibility to material misstatements before considering related controls Risk that a material misstatement is not prevented, or detected and corrected by internal control Risk that audit procedures will not detect material misstatements Risk that the auditor expresses an inappropriate opinion Inherent Risk (IR) Control Risk (CR) Detection Risk (DR) Audit Risk (AR)
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Quick Reference Guide 8.2 Preliminary Assessment of Control Risk (CR) Audit & Assurance Chartered Accountants Program Page 1 of 1 Quick reference guide 8.2 – Preliminary Assessment of Control Risk (CR) Adopt substantive audit approach 1) Do there appear to be controls on which an auditor can rely? 2) Does it appear cost-beneficial to rely on controls? 3) Are controls effectively designed and implemented? 4) Are controls operating effectively?
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Quick Reference Guide 8.3 Control risk & impact on audit plan Audit & Assurance Chartered Accountants Program Page 1 of 1 Quick reference guide 8.3 – Control risk & impact on audit plan Tests of Detail Substantive Analytical Procedures 1) Perform assessment of inherent risk 2) Preliminary assessment of control risk (CR) – see Study Aid 8-2 Consider Dual Purpose tests (i.e. act as both test of controls and substantive procedures) Perform Substantive Procedures (Look for monetary errors) CR less than High CR High Test controls Final assessment of CR Set Detection Risk (DR) Set Detection Risk (DR)
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Quick Reference Guide 9.1 Testing controls Audit & Assurance Chartered Accountants Program Page 1 of 1 Quick reference guide 9.1 – Testing controls Tests of Controls for Control Risk (CR) Assessment Preliminary assessment of CR indicates CR less than high • controls appear good enough to be able to assess CR at less than high (medium) strong Preliminary assessment of CR Indicates CR High • No controls • Not efficient to test controls
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