b) ISA 300 planning an audit of financial statements providesguidance to assist Auditors in planning an audit.Required;Explain the benefits of audit planningc) ISA 520 Analytical procedure provides guidance on the use ofanalytical procedures during the course of the external audit.Analytical procedures can be used as substantive auditprocedures during audit fieldwork, as well as during planning andreview.Required;Identify four factors to consider when using analytical proceduresat the planning stage of the audit.d) Explain the difference between the interim audit and the finalaudit.

Audit planning refers to the means of developing the general strategy as well as detailed approach…

Answered: b) ISA 300 planning an audit of…

b) ISA 300 planning an audit of financial statements provides guidance to assist Auditors in planning an audit. Required; Explain the benefits of audit planning

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter6: Audit Evidence

Section: Chapter Questions

Problem 1RQSC

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Refer to Exhibit 2.5 and answer the following questions. a. (Sections 101, 104, and 105) How does the establishment and operation of the PCAOB help to ensure quality external audits? How will audit firm inspections and investigations by the PCAOB help ensure high audit quality? b. (Sections 201-203) How do Sections 201-203 address audit ()r independence concerns? c. (Section 206) What is a cooling-off period, and how does it address auditor independence concerns? d. (Section 301) How do the audit committee requirements help ensure effective corporate governance? e. (Sections 302 and 906) How do the officer certification requirements help to address the risk of fraud in publicly traded organizations? What is the likelihood that a CFO who is committing fraudulent financial reporting would sign the certification falsely, and what are your reactions to that possibility? f. (Section 401) How does this section relate to the Enron fraud? g. (Section 404) How do the management assessment and audit or attestation of internal controls contained in this section help to address the risk of fraud in publicly traded organizations? h. (Section 407) Why is it important that at least one member of the audit committee be a financial expert? What are the financial reporting implications if the audit committee does not have any individuals serving on it who possess financial expertise? i. (Section 802) How does this section relate to the Enron fraud?
a) ISA 300 Planning an Audit of Financial Statements provides guidance to auditors. Planning an audit involves establishing the overall audit strategy for the engagement and developing an audit plan. Adequate planning benefits the audit of financial statements in several ways. Required: i) Identify and explain the five stages in audit process ii) Discuss three importance of audit planning.
S1: The extent of planning will vary according to the size of the entity, the complexity of the audit, the type of opinion to be expressed and the auditor's assessment of the client's ability to pay the audit fee. S2: The auditor's understanding of the entity and its environment assists in the identification of events, transactions and practices which may have a material effect on the financial statements. S3: One of the elements of the audit planning process most likely to be agreed upon with the client before implementation of the audit strategy is the determination of the timing of inventory observation procedures to be performed. A. Only 1 statement is True B. Only 2 statements are True C. All statements are True D. All statementS are False
10. S1: The major beneficiary of an internal audit is the management. S2: An auditor should design the written audit program so that all material transactions will be selected for testing. Group of answer choices Both S1 and S2 are incorrect. Only S2 is correct. Only S1 is correct. Both S1 and S2 are correct. 11. S1: For financial reporting purposes, an entity’s risk assessment process includes its identification, analysis, and management of risks relevant to the preparation of financial statements in accordance with applicable financial reporting framework. S2: The risk of material misstatement is broader in scope compared to business risks. Group of answer choices Both S1 and S2 are incorrect. Only S2 is correct. Both S1 and S2 are correct. Only S1 is correct.
S1: Regarding communications between auditors, the predecessor auditor has the duty to initiate communications with the successor auditor. S2: Planning means developing a general audit plan and a detailed audit strategy for the expected nature, timing and extent of the audit. S3: The primary objective of an auditor to study and evaluate existing internal control is to obtain a basis for the expression of an auditor's opinion. A. Only 1 statement is True B. Only 2 statements are True C. All statements are True D. All statementS are False
Explain the difference between the overall audit strategy and the audit plan and state the key contents of the overall strategy document. ISA 230 Audit Documentation requires auditors to document their work. Briefly explain the reasons for auditors documenting their work. ISA 580 Written representations explains the purpose and use of written representations as audit evidence. State six items that could be included in a written representation letter. ISA500 Audit Evidence requires auditors to obtain sufficient appropriate audit evidence to be able to draw reasonable conclusions on which to base their audit opinion. Discuss the different sources of evidence available to auditors and assess their relative appropriateness. What factors should the auditor take into consideration before concluding that a financial statement DO NOT show a True and Fair View?
ISA 250 paragraph 10 cover the aspects of ________ a. Audit Conclusion and Reporting b. General Principles and Responsibilities of auditor c. Law and regulation governing accounting and auditing d. Audit Evidence and audit risk
ISA 701 Communicating Key Audit Matters (KAM) in the Independent Auditor’s Report states the following,“The purpose of communicating key audit matters is to enhance the communicative value of the auditor’s reportby providing greater transparency about the audit that was performed.”Required: a) Describe the factors that should be considered in determining KAM and discuss what should be included in the description of a KAM. b) Consider each situation below independently and describe the interactions between them and descriptions of KAM in the Auditor’s Reporti. The relevant matter requires the Auditor to modify the opinion in accordance with ISA 705 (Revised) Modifications to the Opinion of the Independent Auditor’s Report. ii. The auditor has expressed an Adverse Opinion on the financial statements. iii. The auditor has expressed a Disclaimer Opinion on the financial statements. iv. A Material Uncertainty Related to Going Concern Exists. v. The relevant matter should be…
S1: The major beneficiary of an internal audit is the management. S2: An auditor should design the written audit program so that all material transactions will be selected for testing. S3: The principal difference between auditors and accountants is that the auditor is expert on auditing standards such as PSAs while the accountant is expert on accounting standards such as the PFRS. S4: In evaluating materiality, the amount of the misstatements is more important compared to its nature. S5: The concept of materiality would be very important to an auditor in determining transactions that should be validated. S6: The level of assurance expected to be issued affects the amount of procedures to be performed by the practitioner. S7: Analytical procedures are required to be performed during the completion phase of the audit. S8: The entity's objectives have direct relationship with the controls that it implements. Identify which statements are correct.
11. The major purposes of obtaining a client representation letter include: Select one:a. To document in the audit working papers the client's responses to many questions asked by the auditors during the engagementb. All of the mentioned is correct c. To remind the client officers of their primary responsibility for the financial statementsd. To provide evidence in areas where accounting presentation may be dependent upon management's future intentions.
{Auditing} 50. The auditing standard that is relevant to ISA 250, consideration of Laws and Regulations in an audit of financial statements. Could you identify the opinion/s, which is not the objective of ISA 250? a. To obtain sufficient appropriate audit evidence regarding compliance with the provisions of those laws and regulations b. To perform specified audit procedures to help to identify non-compliance with other laws and regulations c. To respond appropriately to non-compliance or suspected non-compliance identified during the audit d. To ignore non-compliance identified during the audit as it is regular practice of entity
(a) (i) Explain the concepts of materiality and audit risk and the relationship between them?(ii) ISA 315 Identifying and assessing the risks of material misstatement requires the auditor to carry out risk assessment procedures to identify the possibility of material misstatement in the financial statements. Required:List three activities that the auditor can perform to help gain an understanding of the entity being audited and so identify the possibility of material misstatements.