ACCT 497 Lecture Notes - Lecture 4: Audit Evidence, Financial Statement, Risk Assessment
30 Jan 2017
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Financial and managerial relationships: due care. Level of performance by reasonable auditor in similar circumstances: professional skepticism and judgment. Skepticism: appropriate questioning and critical assessment of evidence. Judgment: application of training, knowledge, and experience in making informed decisions during audit. It is a conflict of interest, because it is basically being consulted by who is doing their audit. That employee would just not be able to audit their former company because of a chance of conflict of interest because of the previous relationship. Standards of fieldwork vs. principles: performance: standards of fieldwork. Understanding of entity and environment to assess risk of material misstatement. Obtain sufficient appropriate evidence: performance principle. Performance principle: goal is to provide reasonable assurance that financial statements do not contain material misstatements. Preparation of audit plan: written, audit program. Understand entity and environment (including internal control) Sufficient = quantity (how many transactions or components?) Overview of evidence: you mis-detected or forgot to detect.
