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Transcript

  • 1. Evidence To support the report
  • 2. Evidence SOURCESAudit Previous Quality In and outProcedures Audits Procedures of company
  • 3. TYPES Inspect Observe Confirm AnalyticalRecalculate Reperform Procedures INQUIRY ALONE IS NOT ENOUGH
  • 4. ASSERTIONS - ISA 500NOT INDIVIDUALLY ASSESSED - OFTEN SIMULTANEOUSLY
  • 5. ASSERTIONS - ISA 500OCCURCOMPLETE TransactionsACCURATECLASSIFICATION in the year NOT INDIVIDUALLY ASSESSED - OFTEN SIMULTANEOUSLY
  • 6. ASSERTIONS - ISA 500 OCCUR COMPLETE Transactions ACCURATE CLASSIFICATION in the yearEXISTRIGHTS & OBLIGATIONS Y/ECOMPLETEVALUATION & ALLOCATION Balances NOT INDIVIDUALLY ASSESSED - OFTEN SIMULTANEOUSLY
  • 7. ASSERTIONS - ISA 500 OCCUR COMPLETE Transactions ACCURATE CLASSIFICATION in the yearEXISTRIGHTS & OBLIGATIONS Y/ECOMPLETEVALUATION & ALLOCATION Balances OCCUR COMPLETE Disclosure UNDERSTANDABLE ACCURATE NOT INDIVIDUALLY ASSESSED - OFTEN SIMULTANEOUSLY
  • 8. Management Representation LetterReasonable & Competent Consistent Individual? WHEN SUFFICIENT EVIDENCE CAN’T REASONABLY EXIST
  • 9. If Management refuses..Limitation on scope Qualified or disclaimer of Opinion
  • 10. Using the work of an EXPERT UNDERSTAND THEIR WORKEVALUATE APPROPRIATENESS
  • 11. Using the work of an EXPERT Understand their field Capable?Agree engagement terms Objective?Reasonable Conclusions Cost/benefit?Reasonable AssumptionsRelevance of source data UNDERSTAND THEIR WORK EVALUATE APPROPRIATENESS
  • 12. Using the work of an EXPERT UNDERSTAND THEIR WORKEVALUATE APPROPRIATENESS
  • 13. Using the work of an EXPERT not referred to in audit reportSame as any other evidence UNDERSTAND THEIR WORK EVALUATE APPROPRIATENESS
  • 14. RELATED PARTIES
  • 15. RELATED PARTIESCONTROLOWNER
  • 16. RELATED PARTIESCONTROLOWNERRELATEDOWNERS DaughterCommon Control
  • 17. RELATED PARTIESCONTROL SIGNIF. INFLUENCEOWNER DIRECTORRELATEDOWNERS DaughterCommon Control
  • 18. AUDIT PROCEDURES ISA 550 PRIOR YEAR WORKING PAPERS ENTITY PROCEDURES FOR IDENTIFYING RP’S SHAREHOLDER RECORDS & MEETINGS INCOME TAX RETURNS INDICATORS ABNORMAL TERMS NO BUSINESS LOGIC SUBSTANCE DIFFERENT TO FORM NON-ROUTINE HIGH VOLUMES WITH SINGLE PERSONTHE POSSIBILITY OF UNDISCLOSED RELATED PARTIES
  • 19. Requirements of ISA 550Risk of failure to disclose RPs and their transactions
  • 20. Requirements of ISA 550 Risk of failure to disclose RPs and their transactions 1 Consider Riskof material misstatement
  • 21. Requirements of ISA 550 Risk of failure to disclose RPs and their transactions 1 2 Consider Risk Enquire ofof material misstatement Management
  • 22. Requirements of ISA 550 Risk of failure to disclose RPs and their transactions 1 2 3 Consider Risk Enquire of Understandof material misstatement Management Controls
  • 23. Related PartyAuditor Response BIG RP DEALINGS Find new RP’s? OUTSIDE OF NORMAL BUSINESSGET MANAGEMENT TO IDENTIFY ALL TRANSACTIONSSEE WHY CONTROLS FAILEDAPPROPRIATE SUBSTANTIVE TESTSREAPPRAISE RISK FOR FRAUD PURPOSES?INTENTIONAL? EFFECT ON AUDIT CONTRACTS CONSISTENT WITH MANAGEMENT EXPLANATIONS? TRANSACTIONS AUTHORISED?
  • 24. Related PartyAuditor Response BIG RP DEALINGS Find new RP’s? OUTSIDE OF NORMAL BUSINESSGET MANAGEMENT TO IDENTIFY ALL TRANSACTIONSSEE WHY CONTROLS FAILEDAPPROPRIATE SUBSTANTIVE TESTSREAPPRAISE RISK FOR FRAUD PURPOSES?INTENTIONAL? EFFECT ON AUDIT CONTRACTS CONSISTENT WITH MANAGEMENT EXPLANATIONS? TRANSACTIONS AUTHORISED?
  • 25. Related PartyAuditor Response BIG RP DEALINGS Find new RP’s? OUTSIDE OF NORMAL BUSINESSGET MANAGEMENT TO IDENTIFY ALL TRANSACTIONSSEE WHY CONTROLS FAILEDAPPROPRIATE SUBSTANTIVE TESTSREAPPRAISE RISK FOR FRAUD PURPOSES?INTENTIONAL? EFFECT ON AUDIT CONTRACTS CONSISTENT WITH MANAGEMENT EXPLANATIONS? TRANSACTIONS AUTHORISED?
  • 26. Relying on Internal Auditors
  • 27. Relying on Internal Auditors Evaluate IA 1 Appropriate work?
  • 28. Relying on Internal Auditors Evaluate IA 1 Objectivity Operational Appropriate work? Independence 2
  • 29. Relying on Internal Auditors Evaluate IA 1 Objectivity Operational Appropriate work? Independence 2 Technical Competence & Due care 3
  • 30. Relying on Internal Auditors Evaluate IA 1 Objectivity Operational Appropriate work? Independence 2 TechnicalEffective CompetenceCommunication & Due care 4 3
  • 31. Relying on Internal Auditors Evaluate IA 1 ObjectivityEvaluate Operationaleach specific Independence Appropriate work? work 5 2 Technical Effective Competence Communication & Due care 4 3