Auditing 304 part2

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Information about Auditing 304 part2
Education

Published on February 17, 2014

Author: JoseCintronMBA

Source: slideshare.net

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Auditing

ACCO.304-part 2 Jose Cintron, MBA-CPC http://josecintron.com http://mba4help.com jose@mba4help.com

Audit Planning www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Exit Conference www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

Audit Process www.mba4help.com

www.mba4help.com

Audit Process www.mba4help.com

Audit Documentation Audit documentation provides the auditors' record of compliance with generally accepted auditing standards. The documentation (usually in the form of either electronic files or hard copy workpapers) should contain support for the decisions regarding planning and performing the audit, procedures performed, evidence obtained, and conclusions reached. Even though the auditors legally own the audit documentation, professional ethics require that the files not be transferred without consent of the client because of the confidentiality. www.mba4help.com

Audit Planning Planning the audit is an important step to conduct the audit. Auditor uses different planning methods to determine risk assessment, assessment of internal controls etc. The auditor either internal or external cannot complete all the aspects of the audit in one year. The auditors plan the audit is such a way they can cover the audit over a period of time. www.mba4help.com

Audit Process www.mba4help.com

AUDIT EVIDENCE USED TO TEST CASH Cash Receipts Journal The cash receipts journal contains all of the detailed entries for all receipts of cash by the entity (debits to the cash account), including cash deposits. It contains the population of credit entries that should be reflected in the credits to accounts receivable for customer payments. It also contains the adjusting and correcting entries that can result from the bank account reconciliation. www.mba4help.com

Substantive Procedures Audit of Cash. THE AUDIT OF CASH The first procedure in an audit of cash is to obtain the entity-prepared bank reconciliations and audit them, focusing on some of the reconciling items. The cash disbursements journal is the company's checkbook. It contains all detailed entries for checks written during the period being audited. The company's bank reconciliation is the primary document used to test the cash balance in the financial statements. www.mba4help.com

Audit Objectives www.mba4help.com

www.mba4help.com

Audit Evidence www.mba4help.com

Letter of acceptance for an audit. Dear Mr Faulkner, With regards to our previous discussion, held on February 7, 2013, and in response to your request for audit in letter no xxxx, we are pleased to inform you that your proposal for External Auditing of financial statements has been approved by our auditing committee and our company will be carrying out the audit for the financial year 2012/2013. We will be auditing the financial statements of your company, with the main objective of reaching an opinion which will be in accordance with the International Standards of Accounting/Auditing. However, it is likely that some of the information may be left undiscovered, and for that we expect full co-operation from your staff, experts and internal auditors. Apart from analyzing and giving an unbiased opinion, we expect to provide assistance in areas where we find material weaknesses in your accounting system. www.mba4help.com

Audit Risk Audit risk is the probability that an audit team will express an inappropriate audit opinion when the financial statements are materially misstated (i.e., give an unqualified opinion on financial statements that are misleading because of material misstatements that the auditors failed to discover). Such a risk always exists, even when audits are well planned and carefully performed. www.mba4help.com

Audit Risk Audit risk can be broken down into the risks that (1) a material misstatement occurs (inherent risk), (2) is not prevented or detected by client internal controls (control risk), and (3) is not detected by the auditor's procedures (detection risk). Inherent risk and control risk are combined into risk of material misstatement (RMM) www.mba4help.com

Information Risk Information risk is the probability that the information distributed by an entity will be materially false and misleading. Auditors' evidencegathering and reporting reduce this risk to financial statement users, but the team itself faces the risk of issuing an incorrect opinion on the financial statements www.mba4help.com

Materiality in the audit Materiality is a concept or convention within auditing and accounting relating to the importance/significance of an amount, transaction, or discrepancy. The objective of an audit of financial statements is to enable the auditor to express an opinion whether the financial statements are prepared, in all material respects, in conformity with an identified financial reporting framework such as Generally Accepted Accounting Principles (GAAP). The assessment of what is material is a matter of professional judgment. www.mba4help.com

Internal Control Internal control is the process, effected by an entity's Board of Trustees, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: • Reliability of financial reporting, • Effectiveness and efficiency of operations, and • Compliance with applicable laws and regulations. www.mba4help.com

Internal Control Objectives Internal Control Objectives Internal Control objectives are desired goals or conditions for a specific event cycle which, if achieved, minimize the potential that waste, loss, unauthorized use or misappropriation will occur. They are conditions which we want the system of internal control to satisfy. For a control objective to be effective, compliance with it must be measurable and observable. www.mba4help.com

Analytical Procedures Auditors can evaluate financial statement accounts by studying and comparing relationships among financial and nonfinancial data. The methods of study and comparison are known as analytical procedures. Auditors are required to use them when planning the audit and when performing the final review of the financial statements before the audit report is issued. www.mba4help.com

Analytical Procedures www.mba4help.com

jose@mba4help.com http://josecintron.com http://mba4help.com http://www.linkedin.com/in/josecintron http://www.youtube.com/user/josecintronmba https://www.facebook.com/advancebusinessconsulting www.mba4help.com

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