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Documenti di Professioni
Documenti di Cultura
Audit Evidence
and
Documentation
McGraw-Hill/Irwin
Audit Risk
(Accounts)
Assertions about classes of transactions
and events (Transactions)
Assertions about presentation and
disclosure (Disclosures)
5-3
Transactions
Disclosures
Existence
Occurrence
Occurrence
Rights and
obligations
Rights and
obligations
Completeness
Completeness
Completeness
Valuation and
allocation
Accuracy
Accuracy and
valuation
Cutoff
Classification
Classification and
understandability
5-4
Combined Assertions
Used in this Text
Audit Risk
Audit Risk =
=
Risk of Material
Misstatement
Inherent
Risk
Control
Risk
Detection
Risk
=
=
=
=
Audit risk
Inherent risk
Control risk
Detection risk
5-7
Audit Risk
Figure 5. 2
5-8
Inherent Risk
5-9
5-10
Types of transactions
Routine
Nonroutine
Estimation transactions
5-11
5-12
Appropriateness of Audit
Evidence
Relevant
Reliable
5-13
Low
TYPE
Physical
EXAMPLE
Inventory Observation
Documentary
External
External/Internal
Internal
Client Representations
Management Representation
Letter
5-14
Example
Documentary evidence
Third-party representations
Physical evidence
Examination of asset
Computations
Footing, recalculations
Data interrelationships
Analytical procedures
Client representations
Representation letter
5-15
Tests of controls
Substantive procedures
Substantive Procedures
Analytical
procedures
Tests of details
Tests of account balances
Tests of classes of transactions
Tests of disclosures
Extent of Procedures
Holding other factors such as the nature
and timing of procedures constant:
Analytical Procedures (1 of 2)
Steps involved
Developing an expectation
Analytical Procedures (2 of 2)
Types of Expectations
Trend analysisanalyze changes in accounts of a
company over time
Ratio analysis compare relationships between two
or more financial statement accounts or comparisons
of account balances to nonfinancial data
Liquidity (e.g., current ratio)
Leverage (e.g., debt to equity)
Profitability (e.g., gross profit percentage)
Activity (e.g., inventory turnover)
5-21
Ratio Analysis
Approaches
to ratio analysis
Horizontal analysis
Review ratios over time
Vertical analysis
Analyze relationships within a period
Other methods
Regression analysis, reasonableness test
5-22
Identifying Potential
Misstatements
5-23
Primary functions:
Support the auditors compliance with auditing standards
Support the auditors opinion
Secondary functions:
Assist continuing and new audit team members in
planning and performing the audit
Serves as a record of matters of continuing audit interest
Assists in supervision and review of the audit
Demonstrates the accountability of team members
Assists internal reviewers, external peer reviewers,
PCAOB inspectors, and successor auditors in performing
their roles
5-27
files
Permanent
files
5-30
5-31
5-32