Auditing and Assurance Notes Essay

Week 1Purpose of scrutinise enhance the degree of confidence of intended users in the financial story. Expression of an opinion by the meeter on whether the FR is prepared, in all material respects, in accordance with applicable financial reporting framework. Opinion whether the FR is presented fairly, in all material aspects, give a true and fair overtake in accordance with the framework.ASA require canvassor to exercise professional judgment and maintain professional perplexity throughout the planning and performance of the scrutinise to Identify and assess risk of material misstatement, whether due to charade or error, based on an understanding of the entity and its environment, including the entitys intragroup control. Obtain sufficient appropriate analyse evidence about whether material misstatement exist, through designing and implementing appropriate responses to the assessed risks. Audit process (planning, audit evidence, audit reporting)1. PlanningUnderstandin g the business and find riskAssessment of the internal controlsDetermining significant risks for which superfluous audit attention needs to be focused 2. Evidence gatheringTests of controlsSubstantive tests3. Formation of the audit opinionPlanningRisk identificationwhat approaches/ procedure the listener needs to adopt to reduce audit risk. Plan- so that audit will be performed in an effective manner. Key engagement team members in the planningappropriate quality control proceduresConsideration of comparisons of the entitys financial selective information Comparable information for prior periodsAnticipated results of the entitySimilar industry informationAudit Risk- the risk of material misstatement of financial report Assertion levelInherent Risk (IR)the susceptibility () of an assertion() to material misstatement, assuming there are no related controls, IR factors are generally business risks (BR) affecting a specific account assertion. tame Risk (CR)the risk of an assertion being materially misstated because controls will not prevent, or detect and emend errors on a timely basis. CR is the impact of the presence or absence of effective internal control designed to mitigate entitys business riskDetection Risk (DR)the risk that the auditor will not detect the material misstatement. Can be reduced by proper planning, grant of staff, professional scepticism (), supervision and reviewPlanning MaterialityASA320 Materiality no specific criteria for determining materiality, but rather considers it a matter of professional judgement. Determining materiality for planning- 2 stages1. An appropriate bench mark need to be chosen2. Risk assessment based on auditors knowledge of clients business