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Responding to assessed risks - evaluating audit evidenceConsider the potential impact of identified misstatement on the auditEvaluating misstatementsQuantity of audit evidenceIf RMM assessment changes, design and perform further proceduresSufficiencyRelevance - connection between audit procedure and assertion being consideredReliability of audit evidenceAppropriatenessSufficient appropriate audit evidenceFrom external independent sourcesControls over preparation of evidence are effectiveObtained directly by the auditor, rather than indirectly or by inferenceIn documentary form rather than verbalObtained from original documents Reliability of audit evidence is increased when:Do findings change the initial risk assessment at the assertion level?If not, attempt to obtain further audit evidenceHas sufficient appropriate audit evidence been obtained?Form the auditor’s opinionResponses to assessed RMM at the financial statement levelThe linkage between procedures and assessed risks at the assertion levelThe result and conclusions arising from audit proceduresDocumentProcess of evaluating audit evidenceDoes the audit strategy and plan need to be revised?Evaluate the effect of uncorrected misstatements on the financial statementsAre individual or aggregated misstatements material?Consider size and natureConsider whether misstatements are indicative of fraudModify or perform additional proceduresConsider whether there is an impact on other aspects of the auditConcerns over reliability of audit evidenceCritically assess audit evidenceBe alert to audit evidence that might contradict other audit evidenceBe prepared to question the authenticity of documentsChallenge management’s assumptions and judgementsRemain alert to conditions that could indicate fraudProfessional scepticism
Using the work of others, external confirmations and written representationsPositive confirmation requestsNegative confirmation requestsWritten representations regarding management’s responsibilitiesWritten representations required under ISAsWritten representations required to support other audit evidenceExternal confirmationsISA 505Determine significant componentsSet ‘component materiality’Consider ethical requirements (e.g. Independence)Consider professional requirements Understand consolidation process and group-wide controlsUsing component auditorsISA 600Evaluate the internal audit function:Using the work of internal auditorsISA 610Objectivity (ISA 610 para. A7)Technical competence (ISA 610 para. A8)Use of systematic and disciplined approach (including quality control) (ISA 610 para. A11)Evaluate the adequacy of an expert’s work:Using the work of expertsISA 620Consider the consistency of the expert’s work with other audit evidenceThe methods and assumptions usedThe source data used and whether it is accurateWritten representationsISA 580
Subsequent events and going concernMaterial uncertainty?