Consider the possibility of account misstatements 3

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Consider the possibility of account misstatements 3. Complete preliminary analytical procedures 4. Understand the client’s internal controls 5. Identify controls to test 6. Make a plan to test the controls and execute that plan 7. Consider the results of control testing 8. Conduct substantive audit tests I. Update information about various risks and the possibility of account  misstatements o Identify and fraud risk factors and materiality o Identify Account balances or related disclosures that are more likely to  be materially misstated o Identify Potential causes of the misstatement o Identify Important processes that may affect one or more account  balances o Consider control activities o Consider controls over significant, unusual transactions
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o Consider controls over journal entries and adjustments made in the  period-end financial reporting process o Consider controls over related party transactions o Consider controls related to estimate o Consider controls that mitigate incentives for management to falsity  results III. Complete preliminary analytics o Perform preliminary analytics to determine if unexpected relationships  exist and how testing should be modified IV. Understand client’s internal controls o Consider entity-level controls o Obtain client documentation of significant accounts and processes  o Obtain client documentation of COSO; especially the control  environment, risk assessment, and monitoring o Identifying how management has corrected identified control  deficiencies, where applicable o Understanding management’s monitoring of previously identified  effective controls o Evaluating how management assimilates data and the approach it uses  to draw its conclusions on the effectiveness of internal control over  financial reporting, including understanding how it has reached its  conclusions regarding the report on internal control  Identify controls to test o Formulating an opinion on the entity’s internal controls o Reducing substantive testing for the financial statement audit Evaluating the control environment, risk assessment, information and  communication, and monitoring  Adherence to ethic standards Evaluate framework used to assess risk Evaluate whistleblower program Evaluate evaluations made by management to determine whether other  COSO components are functioning 
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Management’s process for evaluating internal control—reliance on the  work of the internal control, consider Internal auditor independence Internal auditor competency Design and comprehensiveness of internal audit testing approach Evaluate internal audit testing documentation
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