Escolar Documentos
Profissional Documentos
Cultura Documentos
and the
Audit Opinion Formulation Process
Successful
Uniformity defense against
allegation
Measure the
Clear
quality of the
definition of
service
responsibilities
Standards
Generally Accepted Auditing Standards
• Generally
• Technical • Planning
Accepted
training and • Internal
Accounting
Proficiency Control
Principles
• Independence Consideration
• Inconsistency
• Professional • Evidential
• Disclosure
Care Matter
• Opinion
• International Standards on Auditing (ISAs)
• International Standards on Assurance Engagement
(ISAEs)
• International Standards on Review Engagements
(ISREs)
• International Standards on Related Services (ISRSs)
• Philippine Standards on Auditing (PSAs)
• Philippine Standards on Assurance
Engagement (PSAEs)
• Philippine Standards on Review
Engagements (PSREs)
• Philippine Standards on Related Services
(PSRSs)
A. Financial Statements Audit only
B. Integrated Audit
Phase I Making Client Acceptance and
Continuance Decisions
Phase II Performing Risk Assessment
Phase III Obtaining Evidence about Internal
Control Operating Effectiveness
Phase IV Obtaining Substantive Evidence
about Accounts, Disclosure and
Assertions
Phase V Completing the Audit and Making
Reporting Decisions
A. Accounting Cycle
B. Management Assertions
D. Documentations
Audit evidence: Information used by auditor in
arriving at conclusions on which the opinion is
based
Audit procedures: Procedures designed to obtain
audit evidence to support audit opinion(s)
Sufficient appropriate audit evidence: Measure of
the quantity and quality of audit evidence
Audit program
◦ Lists audit procedures to be followed in gathering
evidence
◦ Helps monitor progress and supervising work
• Risk assessment procedures: Provide information
for assessing the risks of material misstatement
in the financial statements
• Used for purposes of planning the audit
• Tests of controls: Designed for evaluating
operating effectiveness of controls
• Substantive procedures: Designed for detecting
material misstatements at assertion level
• Comprising of tests of details and substantive analytical
procedures
Record of audit procedures performed,
relevant audit evidence obtained, and
conclusions the auditor reached
Control risk
◦ Risk that a misstatement that could occur in an assertion
about a class of transaction, account balance or disclosure
and that could be material, either individually or when
aggregated with other misstatements, will not be
prevented, or detected and corrected, on a timely basis by
the organization’s internal control
Focuses on design effectiveness and
implementation
High control risk
◦ Weak or ineffective internal controls
◦ Auditor cannot rely on controls to reduce
substantive procedures for account balances
Low control risk
◦ Effective internal controls
◦ Auditor will test operating effectiveness of
controls to reduce substantive procedures for
account balances
Purpose of risk assessment procedures
◦ Identify risks of material misstatement
◦ Determine where misstatements in financial
statements may occur
◦ Design appropriate audit strategy
Controls reliance audit: Includes tests of
controls and substantive procedures
Substantive audit: Includes substantive
procedures and does not include tests of
controls
Auditor tests controls to determine whether
controls are operating effectively
◦ At year-end (for opinion on internal control
effectiveness)
◦ Throughout the year (for the financial statement
audit)
Involves choosing controls that effectively
indicate capability to address the assessed
risk of material misstatement for relevant
assertions
Includes controls in all five COSO components
Types of tests of controls
◦ Inquiry
◦ Observation
◦ Inspection of relevant documentation
◦ Reperformance of a control
• If control deficiencies are identified
• Assess them to determine whether preliminary
control risk assessment should be modified
• Record the implications for substantive
procedures
• If no control deficiencies are identified
• Assess whether preliminary control risk
assessment is still appropriate
• Determine extent that controls can provide
evidence on accuracy of account balances
• Determine planned substantive audit procedures
Determine how much assurance about
reliability of account balances can be
obtained from the effective operation of
controls
Within any audit, level of assurance will vary
across:
◦ Accounts
◦ Disclosures
◦ Assertions
Performing Substantive Procedures
Substantive procedure- An audit procedure to
detect material misstaments at the assertion
level.
The auditor performs substantive procedures
for the relevant assertions of each significant
account and disclosure, regardless of the
assessed level of control risk. These
procedures can include both substantive
analytical procedures and test of details of
account balances.
Substantive analytical procedures are optional,
whereas test of details will be necessary for
significant account and disclosures.
In determining appropriate substantive
procedures, the auditor considers (a) the
source of potential misstatement and (b) the
extent and type of potential misstatements.
Audit Evidence:
Includes both internally generated and
external information
Includes information that both may support,
or contradicts, management’s assertion
Is influence by managements action
Invoices
Contracts
General Ledgers
Subsidiary Ledgers
Journal Entries
Audit
Evidence
Appropriatenes
(Relevant & Sufficiency
Reliable)
Quantity of Evidence
Quality of Evidence that Auditor collects
that Auditor
collects
APPROPRIATENESS- RELEVANCE
Cumulative
Audit
Evidence
Reperformance
Inquiry