Describe How You Would Conduct The Audit Process

Moreover, the auditor should preform test for effectiveness of internal controls. He may interview management by asking questions on the process of the transactions and operational activities. He may discuss with management the process of some transactions from beginning to end and then test it by using sample testing. Also he/she should make sure that there is proper control of activities; policies and procedures for adequate segregation of duties are met.

It is common industry knowledge that an audit plan provides the specific guidelines auditors must follow when conducting an external audit. External public accounting firms conduct external audits to ensure outside stakeholders that the company’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS) standards.

“Keystone Computers & Networks, Inc. (KCN) is a company that sells and installs computer workstations and networking software to business customers. The CPA firm of Adams, Barnes & Co. has audited the financial statements of KCN for the past three years. The case illustrates selective audit planning working papers that were prepared by the staff of Adams, Barnes & Co. for this year’s audit.” I will be listing the order in which I would perform this audit and I will decide if I should select the client and focus on the key audit objectives while applying the audit risk model.

(2) Internal Control Phase: The auditor normally assesses the risk of material misstatement by examining both the general control environment and the application controls per business process

|Develop Audit programs for the substantive audit procedures for the balance sheet and income statement |35 |

In accordance with ASA 315.11 understanding the entity and its environment is a critical area that auditor should gain in the process of planning. The knowledge gain by the auditor helps the auditor to recognise the transactions as well as activities within the entity. Furthermore, it assists the auditor to understand the risk areas which can create a significant effect on the financial report and it also clarifies the appropriateness and reasonableness of accounting policies, estimates and assumptions used within the entity. Gay and Simnett (2015, p.265 ) defines that according to ASA 315.11 “the auditor’s knowledge should consist of consideration of factors such as its ownership, organizational structure, governance structures, objectives

If an auditor is asked by a client to be involved in its evaluation of internal controls, the auditor should make sure that nothing is done to impair the appearance of objectivity and independence. The auditor may help in the gathering and preparation information as long as management directs the entire process, and is responsible for documenting controls. In order to ensure a consistent and comprehensive companywide process, auditors are recommending that their clients establish project teams that report directly to the CEO or CFO (McConnell, Banks, 2003).

Various activities and steps are conducted when deciding and considering the acceptance of a new audit client including these eight. Firstly, financial statements and reports are acquired and reviewed. These reports include the company’s annual reports, management reports and income tax returns. Next step includes investigating and inquiring of third parties on the particular company. The opinions of third parties especially the external users such as bank, creditors, suppliers, tax authorities and even consumers are essential to know more about a company. Besides that, permission should be gained to communicate with the

(ii) Develop a comprehensive internal audit program or plan. The program should include the purpose, scope, assignment of personnel, sampling, control and duration as well as establish appropriate audit processes, policies and operating procedures IFI;

The first section of this chapter provides an overview of auditing and the steps in the auditing process. The second section descdbes a methodology and set of techniques for evaluating

The purpose of the memo is to describe the auditor 's responsibility to consider fraud in financial statements by following eight steps to make sure the financial statements are free of material misstatement. The memo begins with an elaboration of fraud and the concepts related to it. A list of the steps is then provided before finally giving an outline of the various generic red flags of fraud that can act as a lead to the auditor in identifying fraud.

Another constructive way the audit is used is to ensure certain measures are present to support due diligence defence. Audits are usually carried out continuously to highlight any problems or issues that the business needs to deal with.

For improving the level of trust in the financial statements, a qualified outside gathering (an auditor) is locked in to inspect the money-related comments. Including relevant exposures created by the administration, to give their expert conclusion on whether they reasonably reflect, in every single material admiration, the organization 's money related execution over a period (a pay proclamation) and budgetary position starting a particular date (a financial record) as per pertinent GAAP. As a rule, this is required by law.

Audit is determined by a formal examination of a firm’s financial records, inspection of its accounts and other related documents by accountants called auditors. Basically, auditing is a controlled process which includes professional judgment and requires applying of analytical skills. Also, it involves appropriate forms of expertise and its approaching. A team with professional skills perform this task according to the relevant standards, for instance, International Standards on Auditing (ISAs), International Financial Reporting Standards (IFRS), International Public Sector Accounting Standards (IPSAS) or International Standards on Quality Control (ISQCs) and other applicable equivalents.

An audit is the examination and checking of financial statements by a professional auditor or accountant who has had no part in its preparation. The process involves an examination of the evidence from which the final revenue accounts and balance sheet, or other statements of an organization have been prepared, in order to ascertain that they present a true reflection of the summarized transactions for the period under review and of the financial state of the organization at the end date, so enabling the auditor to report thereon. The objective of the ordinary audit of financial statements by the independent auditor is the expression of an opinion as to the fairness with which