Assurance note for 16.09
Assurance note for 16.09
Assurance note for 16.09
1/ Planning
Audit strategy
- Def + formulate general strategy for the audit
+ set scope, timming, direction for the audit
+ guide the development of audit plan
- Key contents
(1) Understanding entity's environment
+ general economic factors, industry conditions
+ important characteristics of clients:
/ business
/ rpt requirement, including changes since previous audit
/ principal business trans
/financial performance
+ general level of competence of management
(4) Consequent, nature, timing, extent of procedures => effect of technology inf on
(5) Coordination, direction, supervision, review => number of staff, location, a
(6) Other matters
Audit plan
- Def
+ more detailed than strategy
+ set out nature, timing, extent of audit procedures
+ show how overal audit strategy implemented
2/ Analytical procedures
Def
Elements consitute
Source of information
Key ratios
3/ Material
Def
Material =>relate to level of misstatement that affect decision of users of the accounts
PM (performance material misstatement) < M
Tolerable misstatement => maximum degree that auditor accept in a class of trans/ balance in Fs
4/ Audit risk
IR, CR, DR
Inherent risk => related to
+ balance of important acc
+ balance included/ estimated
+ FS => liable to misstatement causes:
-- comp in trouble
-- comp seeking to raise finance
-- other motivation for director to misstate figures (profit target/ profit related to bonu
-- FS contain balance with complex financial accounting requirment/ choice of treatm
=> auditor MUST use professional judgement and knowledge => assess IR
if no knowledge/ no available inf => IR high
Significant risk
risk of fraud
significant changes in economy, accounting and other development
complex trans unusual trans
significant trans with related parties
degree of subjectivity in financial inf
5/ Fraud and errors
Difference btw frauds and errors
Fraud Error
intentionally act unintentionally act
involved in deception to obtain illegal omission of an amount/ a disclosure
advantages
Type of fraud
- Fraudulent financial reporting: gian lận báo cáo tài chính
intentionally acts, omit amount/ disclosure in FSs to deceive FSs users
(cố tình bỏ / không phản ánh đúng BCTC để lừa gạt người sd BCTC)
- Misappropriation of assets: biển thủ tài sản
Responsibilities
Mana => detect, prevent frauds, errors
Auditor => obtain reasonable assurance that FSs free from material missta whether caused by fr
=> identify, assess risk of material misstatement due to fraud
=> obtain evidence regarding risks
=> respond to any actual/ suspected fraud identified during the audit
Note: Material misstat from fraud => greater risk => involve sophisticated / collusion btw indi/ mana fraud
Why to understand
- to assesss, identify risk of MM to Fs
- enable auditors to design, perform further audit procedures
- provide a FW of reference for exercising audit judgement
nges since previous audit What to understand
- industry, regulatory, other external factors
- nature of entiry (selection, application of accounting policies)
- objectivities and strategies related to business risk that may
cause material misstatement in FSs
- measurement, rv of entity's financial performance
- internal control