Describe How You Would Conduct The Audit Process

Read the auditor’s report included in the annual report of the company and explain its purpose. Identify the name of the auditing firm.

a. Describe the purpose of analytical procedures performed in the planning stage of the audit.

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.

(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

“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.

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).

This assessment required students to take the role of an audit manager that is currently employed with Deep Breath LCC, a medium sized national accounting firm. This particular firm offers auditing services as well as tax services. The main purpose of my role as the audit manager is to decide and justify reasons on a new audit client acceptance. The process of accepting a new client is not a simple procedure especially during this phase where the public accounting environment is changing drastically. Intense competitive pressures among audit firms in selecting the best clients and increased exposures of litigation have driven auditors to be more prudent in the process of making decisions when accepting a new audit

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

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.

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.

(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;

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

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.

The auditor then reviews the requirements against his capability to conduct the audit effectively and focus his attention on the most critical areas. The auditor should brainstorm on the areas that the client’s financial statements may be susceptible to fraud, how the assets of the client can be misappropriated and finally, how the management and those charged with governance can perpetrate fraudulent financial statements and be able to conceal the frauds. The auditor should also brainstorm any known internal and external factors that can be an incentive, or that can create pressure to the management to and other employees to commit fraud. The auditor should ensure the brainstorming session identifies the potential problems that are likely to occur during and after the audit process. The auditor brainstorming with the audit team helps ensure the work is implemented expeditiously and that no areas are left un-attended to. It also ensures that the work is properly coordinated among the staff and that all resources are well coordinated towards the achievement of the audit objectives.