Management and Organizational Studies 3363A/B Chapter Notes - Chapter 10: Audit Evidence, Risk Assessment, Internal Control
6 Dec 2018
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Chapter 10 develop risk response: audit strategy and audit program. Direction is how you will execute your strategy: combined audit strategy obtains the audit evidence required by using tests of controls and substantive tests, substantive audit strategy obtains the audit evidence required by using substantive tests. It is a dynamic process: once you start testing, your strategy might change, documents detailed information about audit procedures to be performed. Auditors use five tests to determine whether f/s are fairly stated: risk assessment procedures, test of controls, substantive tests of transactions, substantive analytical procedures, substantive tests of balances. Risk assessment procedures: assesses likelihood of material misstatement (both inherent and control risk) in f/s. Includes procedures to obtain an understanding of internal control: are the controls effective, simply identifying where there could be errors or misstatements. Note substantive tests: procedure designed to test for dollar misstatements that directly affect the correctness of.
