BU477 Chapter Notes - Chapter 10: Audit Risk, Risk Assessment, Financial Statement
Document Summary
Overall audit strategy: scope, timing, and direction of the audit, which guides the development of the audit plan. Combined audit strategy: strategy for auditing f/s assertions in which the auditor evaluates control risk below maximum and obtains the audit evidence required by using tests of controls and substantive tests. Substantive audit strategy: strategy for auditing f/s assertions in which the auditor evaluates control risk at maximum and obtains the audit evidence required by using substantive tests. Identify the characteristics of the engagement that defines its scope: specific characteristics that may increase scope of audit (e. g. being multinational) Determine the reporting requirements: varies from audit to audit (requirements and deadlines for public companies; industry requirements) Consider results of preliminary engagement activities: risks identified in risk assessment stage (fraud risks, significant events occurred since last audit), and evaluation of operating effectiveness of internal control and prior misstatements (prev. audit results) Determine the nature, timing, and extent of resources necessary to perform the.
