Auditoria 5

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Modern Auditing:Assurance Services and the Integrity

of Financial Reporting, 8thEdition

William C. BoyntonCalifornia Polytechnic State

University at San Luis Obispo

Raymond N. JohnsonPortland State University

Chapter 5Overview of the Financial Statement Audit


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Chapter 5 Overview


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Overview of the Audit Process


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Overview of the Audit Process

(cont.)


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Phase I - Perform Risk

Assessment Procedures

Identify Relevant Financial Statement

Assertions

Existence or Occurrence

Completeness

Rights and Obligations

Valuation or Allocation

Presentation and Disclosure


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Understand the Entity and itsEnvironment Industry, Regulatory Environment, and Other

External Factors

Nature of Entity, Including AccountingPolicies

Objectives, Strategies, and Business Risks

Management and Review of FinancialPerformance


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Make Decisions About Materiality

Based on professional judgment

Guides auditor in evaluation

Perform Preliminary Analytical

Procedures

Study of plausible relationships

Identification of potential

misstatements


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Identify RisksAudit Risk Model


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Identify RiskRisk of Fraud


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Develop Preliminary Audit

Strategies

Understand Internal Control

Identify types of potential

misstatements

Consider factors that affect risk of

material misstatement

Design audit procedures


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Phase IIAssess the Risk of

Material Misstatement

Relate Risk to Potential Misstatements Assertion Level Risks

Financial Statement Level Risks

Determining the Magnitude of PotentialMisstatements

Considering the Likelihood of MaterialMisstatements

Significant Inherent Risks


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Study Break

1. This assertion deal with whether the

accounts have been included in the

financial statements at the appropriate

amount.A. Existence or Occurrence

B. Completeness

C. Rights and ObligationsD. Valuation or Allocation

D. Valuation or Allocation


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Study Break

2. ________ is defined as the susceptibility

of an assertion to a material

misstatement assuming there are no

internal controls.A. Inherent risk

B. Control risk

C. Detection riskD. Audit risk

A. Inherent risk


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Phase IIIRespond to Assessed

Risks

Staffing and Supervision

Nature of Audit Tests Risk Assessment Procedures

Tests of Control

Substantive Tests


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Substantive Tests

Initial Procedures

Substantive Analytic Procedures

Tests of Details of Transactions

Tests of Details of Balances

Tests of Details of Accounting Estimates

Tests of Details of Disclosures


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Phase IIIRespond to Assessed

Risks

Timing of Audit Tests

Extent of Audit Tests

Responding to Significant Inherent

Risks


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Phase IVPerform Further Audit

Procedures

Further Risk Assessment Procedures

Tests of Controls

Substantive Tests


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Phase VEvaluate Evidence

Reevaluate Risk Assessment

Procedures

Determine the Significance of

Findings

Form and Document Conclusions


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Phase VICommunicate Audit

Findings

The Auditors Opinion

Other Required Communications

Other Assurance Service Findings


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Study Break

3. Responding to assessed risksincludes all of the followingexcept:

A. Staffing and SupervisionB. Timing of Audit Tests

C. Evaluating Evidence

D. Extent of Audit Tests

C. Evaluating Evidence


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Study Break

4. Other required communications include

all of the following except:

A. Disagreements with management

B. Significant audit adjustments

C. Consultation with other accountants

D. Assessment of management

performance

D. Assessment of management

performance

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