Concluding, Communications and
Final substantive audit procedures typically performed shortly after
yearend and include roll-forward procedures pertinent to interim
work as well as yearend testing (e.g. income taxes).
Substantive Auditing Application of GAAP
Key auditing objectives substantiating amounts and determining
that accounts/disclosures are presented in accordance with USGAAP
in the US (or other applicable accounting such as IFRS elsewhere).
Internal Controls and Risk
Internal controls - COSO
The Committee of Sponsoring Organizations (COSO) was
organized in 1985 and published Internal Control
Integrated Framework in 1992.
The IC Framework is the accepted model today for
Sampling and Analytics in
Mathematical and non-mathematical sampling (or statistical/nonstatistical) is used extensively for both substantive testing and
Statistical sampling uses statistical probability methods in o
Assume public company for purposes of discussion
Audit Risk fundamentally risk of issuing incorrect opinion (materially incorrect error or fraud)
Materially incorrect statements (error or fraud) expose all parties to litigation risk including the auditors
Complex set of principles and rules promulgated by
the AICPA, SEC, PCAOB, DOL and others.
Lack of independence or loss of independence
precludes a firm from serving as the external auditor
and may result in withdrawal
Inventory is relevant in a large number of instances and is
typically a very significant asset on the balance sheet
manufacturing, wholesale distribution, high technology, and
retail all tend to have significant inventories.
Revenue and Revenue Recognition
Revenue in most industries, revenue and revenue recognition
in particular are among the most intensive areas of an audit.
Risk of fraud is presumed when planning and performed audit
procedures related to revenue (