1、13-1Overall Audit Planand Audit ProgramChapter 13Learning Objective 1Use the five types of audit teststo determine whether financialstatements are fairly stated.Types of Tests Risk assessment procedures Further audit proceduresFurther Audit Proceduresand the Audit Risk ModelAudit riskmodelFurther au
2、dit proceduresTests ofcontrolsSubstantivetests oftransactions+AARIR CR=PDR+AnalyticalproceduresTests ofdetails ofbalancesSufficientcompetentevidenceper GASS+=Risk Assessment ProceduresA major part of these procedures aredone to obtain an understandingof internal control.Role of All Audit Tests in th
3、e Sales and Collection CycleSalesAccountsReceivableCash inBankSalestransactionsCash receiptstransactionsEndingbalanceEndingbalanceTOC+STOT+AP+TDB=Sufficient appropriate evidence per GAASAudited byTOC,STOT,and APAudited by AP and TDBAudited byTOC,STOT,and APLearning Objective 2Select the appropriate
4、typesof audit tests.Relationship Between Further Audit Procedures and EvidenceFurther Audit ProceduresTests of controlsSubstantive tests of transactionsAnalytical proceduresTests of details of balancesPhysicalexaminationConfirmationDocumentationObservation Type of EvidenceRelationship Between Furthe
5、r Audit Procedures and EvidenceFurther Audit ProceduresTests of controlsSubstantive tests of transactionsAnalytical proceduresTests of details of balancesInquiries ofthe ClientReperformanceAnalyticalProceduresRecalculation Type of EvidenceAudit Assurance at Different Levels of Internal Control Effec
6、tivenessAcceptableassuranceNoassuranceINTERNAL CONTROL EFFECTIVENESSWeak controlStrong controlReliance on controls:C3 None,C2 Some,C1 MaximumAudit assurancefrom control riskassessment andtests of controlAudit assurancefrom substantivetestsACBC3C2C1AUDIT ASSURANCELearning Objective 3Understand how in
7、formationtechnology affects audit testing.Impact of Information Technology on Audit TestingSAS 80(AU 326)and SAS 109(AU 319)provide guidance for auditors of entitiesthat transmit,process,maintain,or accesssignificant information electronically.Impact of Information Technology on Audit TestingCompute
8、r assisted audit techniques may beused to test automated controls or data.Reports produced by IT may be used to testthe effectiveness of IT general controls.Program change controls Access controlsLearning Objective 4Understand the concept ofevidence mix and how itshould be varied indifferent circums
9、tances.Variations in Evidence MixAudit 1Audit 2Audit 3Audit 4EMNMSMEEEEMESMEETestsofControlsSubstantiveTests ofTransactionsAnalyticalProceduresTests ofDetails ofBalancesAmount of testing:Extensive,Medium,Small,NoneLearning Objective 5Design an audit program.Audit ProgramPart 1:Tests of controls and
10、substantivetests of transactionsPart 2:Analytical proceduresPart 3:Tests of details and balancesTests of Controls and Substantive Tests of Transactions1.Apply the transaction-related audit objectivesto the class of transactions being tested.2.Identify key controls that should reducecontrol risk for
11、each audit objective.3.Develop appropriate tests of controls.4.Design substantive tests of transactions.Methodology for Designing Controls and Substantive TestsPerform risk assessmentprocedures tounderstand internalcontrolAssesscontrolriskDetermineextentof testingcontrolsDesign tests of controlsand
12、substantive testsof transactions to meettransaction-relatedaudit objectivesAudit proceduresSample sizeItems to selectTimingFour-Step Approach to Designing Control and Substantive TestsApply transaction-relatedaudit objectives to a classof transactions(Step 1)Audit proceduresSample sizeItems to selec
13、tTimingAudit proceduresSample sizeItems to selectTimingIdentify key controls andmake a preliminaryassessment of control risk(Step 2)Design tests of controls(Step 3)Design substantive tests oftransactions(Step 4)Methodology for Designing Tests of Balances Accounts ReceivableIdentify clientbusiness ri
14、sksaffecting accountsreceivableSet tolerablemisstatement andassess inherent riskfor accounts receivableAssess controlrisk for salesand collectioncycleDesign and performanalytical proceduresfor accountsreceivable balanceDesign and perform testsof controls and substantivetests of transactions forsales
15、 and collection cycleAudit proceduresSample sizeItems to selectTimingDesign tests of details ofaccounts receivable balanceto satisfy balance-relatedaudit objectivesApproach to Designing Tests of Details of BalancesApply transaction-relatedaudit objectives to a classof transactionsIdentify key contro
16、lsand make an assessmentof control riskAudit proceduresSample sizeItems to selectTimingDesign tests of controlsAudit proceduresSample sizeItems to selectTimingDesign substantive testsof transactionsApproach to Designing Tests of Details of BalancesApply balance-related auditobjectives to anaccount b
17、alanceDesign testsof details ofbalancesDecide tolerablemisstatementMake preliminaryjudgment aboutmaterialityDesign analyticalproceduresDecide acceptableaudit riskAssess inherent riskAssess clientbusiness riskLearning Objective 6Compare and contrasttransaction-related auditobjectives and balance-rela
18、tedaudit objectives.Relationship of Transaction-related Audit Objectives to Balance-related Audit ObjectivesTransaction-relatedAuditObjectiveBalance-relatedAuditObjectiveNature ofRelationshipExistenceCompletenessAccuracyPosting and summarizationClassificationTimingExistence or completenessCompletene
19、ss or existenceAccuracyDetail tie-inClassificationCutoffRealizable valueRights and obligationDirectDirectDirectDirectDirectDirectNoneNoneRelationship Among Five Key Evidence-related Terms Phases of the audit process Audit objectives Types of tests Evidence decisions Types of evidencePhases of the Au
20、dit ProcessI.Plan and design an audit approach.II.Perform tests of controls andsubstantive tests of transactions.III.Perform analytical procedures andtests of details of balances.IV.Complete the audit and issue anaudit report.Audit Objectives Transaction-related Balance-related Presentation and disc
21、losure-relatedTypes of Tests Risk assessment procedures Tests of controls Substantive tests of transactions Analytical procedures Tests of details of balancesEvidence Decisions Sample size Items to select Timing Audit proceduresTypes of Evidence Documentation Inquiries of the client Analytical proce
22、dures Observation Reperformance Recalculation Physical examination Confirmation Learning Objective 7Integrate the four phasesof the audit process.Summary of the Audit ProcessPhase IPlan and designan audit approachPhase IIPerform tests ofcontrols andsubstantive testsof transactionsPhase IIIPerform an
23、alyticalprocedures andtests of detailsof balancesPhase IVComplete theaudit and issuean audit reportSummary of the Audit Process:Phase IAccept client and perform initial planningUnderstand the clients business and industryAssess clients business riskPerform preliminary analytical proceduresSummary of
24、 the Audit Process:Phase ISet materiality and assess acceptableaudit risk and inherent riskUnderstand internal control and assess control riskGather information to assess fraud risksDevelop overall audit plan and audit programSummary of the Audit Process:Phase IIPerform substantive tests of transact
25、ionsNoYesPerform tests of controlsAssess likelihood of misstatements infinancial statementsPlan to reduce assessedlevel of control risk?Summary of the Audit Process:Phase IIIPerform analytical proceduresPerform tests of key itemsPerform additional testsof details of balancesLowMediumHigh orunknownSummary of the Audit Process:Phase IVPerform additional tests forpresentation and disclosureAccumulate final evidenceEvaluate resultsIssue audit reportCommunicate with auditcommittee and management13-39End of Chapter 13
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