The Objective Of Auditing Standard

The auditor must remember that all information collected during the audit needs to be sufficient enough to further the audit process. The information must not only possess the two qualities, relevance and reliability, but it should also test various assertions. For instance, in the audit of Walmart, the auditor should make an attempt to acquire information such as financial statements from the company’s bank, as opposed to acquiring the statements from Walmart’s management. Taking such crucial information from Walmart’s management will put the reliability of that information into question. It is possible that management may manipulate the financial statements, so that they are more appealing to the public and investors. Management may do things

CAS 300 requires auditors to their audit using a risk based model where the nature, timing and extent of audit procedures are based on the assessed risk of material misstatement. Pickett (2006) argues that for audits to be effective and efficient, much of the audit effort should be focused on areas that are considered to pose the highest audit risk. Additional audit procedures should be linked to individual audit assertions whereas other audit procedures need to be performed as and when needed. Thus, for an audit plan to be put in place, it is necessary for an auditor to come up with a risk profile of the client comprising an understanding of the business operating by the audit client, assess business risk and also perform its preliminary analytical review.

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.

To begin the review process there should be some knowledge of the processes and procedures in the accounting department. It may be a good idea to observe all of the procedures that go into creating the financial statements. Look for any weaknesses or questionable practices and create a list of questions. Then in the next phase the auditor can conduct interviews to get a better understanding of the accounting staff. Observations and interviews can set the groundwork and provide information into any nuances or potential fraud or abuse. Any material weaknesses found can be further explored.

In preparing for the audit all aspects of a company need to be reviewed. For the preparation of the audit several things must be considered as define in the following pages.

The objectives of an auditor is to plan an audit so that it is conducted effectively. The objective of an audit is to provide assurance on the financial statements of the company. The engagement is responsible for the planning and performance of the audit. He selects the team accordingly so that the audit is completed effectively and efficiently. The audit strategy sets out the procedures, sets the scope, timing and direction of the audit. ISA 300 requires the auditor to consider specific matters when establishing the audit strategy, and provides a list of typical matters to be considered. The auditor is responsible to correctly set the strategy so that the audit objectives is achieved. The audit strategy contains the general audit plan, risk

Auditing planning is important because it helps the auditor determine his/her approach to the audit. There are two considerations that affect the approach: 1). Sufficient appropriate evidence must be accumulated to meet the auditor’s professional responsibility and 2). The cost of accumulating the evidence should be minimized. Concern for sufficient appropriate evidence and cost necessitates planning the engagement. The plan should result in an effective audit approach at a reasonable cost.

An important decision for any shareholder is deciding whether or not to do business with that company. When a business is audited, the operations are reviewed to make sure that nothing is being hidden. An auditor will review the company’s financial statement and practices to confirm that each are direct and correct. The financial statements are the business’s way of representing them and showing that they are following the Generally Accepted Accounting Principles. The audit process is an important one because it provides a platform for the auditor’s opinion concerning the financial statements of the company. As part of the audit process the auditor will conduct an audit plan that outlines a number of actions that he or she will be perform while also detailing the reason for those actions. With every audit, the business’s management is in charge of handing over the financial statements that the auditor will review; while the auditor will review the statements for any material or immaterial misstatements.

The Auditing Standards Board (ASB) redrafted the standards for clarity and reorganized all of the auditing sections (AU) into new one adding C after (AU-C), bringing both significant and subtle changes. For some of the standards only the format changed but others significantly impacted the auditor’s work. This project was very important for the globalization

Note: Answer the questions as comprehensively as possible. Reference to Auditing Standards, your textbook, and other relevant authoritative sources is expected where appropriate. Even where some of the questions are quite general, try as much as possible to relate your answer to the case.

The auditor must obtain an understanding of the entity and its environment, including internal controls, so that they can identify and assess the risks of material misstatement on financial statements due to fraud or error and design and perform further audit procedures.

Abernethy and Chapman’s engagement team comprises of a partner-in-charge, a manager, a senior auditor, and one or more staff auditors. The partner-in-charge leads the engagement team and is responsible for all final decisions made while conducting the audit. The manager, senior auditor, and staff auditors are to perform the actual audit examination. The engagement team’s responsibility is to complete the audit with competency and objectivity.

The purpose and responsibility of an audit is to provide reasonable assurance that the financial statements are free from material misstatements whether due to fraud or error. The audit will follow the authoritative guidance provided by the PCAOB and AICPA auditing standards. In relation to Johnson & Johnson Company, it would be a plus if the auditor had experience with the Consumer, Pharmaceutical and Medical Devices, but not necessary since a firm would be able to hire an expert to consult on the audit. The test will cover risk assessment procedures, tests of controls and substantive procedures.

An auditor would be interested in the above section, but just as important would be the Investing and Financing Activities sections. Auditors need to know where the company invested its money and where it received its money in order to figure out whether

This article initiates with the introduction on what is audit planning. It basically addresses the audit plan strategy of K & S Corporation limited’s Financial Statements. Being an external auditor of the company, key factors to be considered in auditing the financials of the subject company have been discussed in the article. The most significant accounts at risk being materially misstated have been critically examined citing the possible risks associated with such accounts. Last but not the least, the article concludes with recommendations with respect to audit assessment plan of the company. Hence, this article seeks to act as a ready reckoner guide for an audit manager in audit planning of K & S Corporation Limited.