The document discusses learning outcomes related to risk assessment and internal control. After studying this chapter, readers will be able to understand audit risk, risk of material misstatement and its components, risk assessment procedures, internal control and its components, and identifying significant risks. The key topics covered include audit risk, risk of material misstatement, inherent risk, control risk, risk assessment procedures performed by auditors, and identifying and assessing risks of material misstatement at the financial statement and assertion levels.
1) Does the audit program only include the testing that is to be don.pdfappua5
1) Does the audit program only include the testing that is to be done?1
2) Is the audit program an overall audit program for the entire engagement or does the audit
program have \"subsets\" for each area that we examine?1
3) What are the responsibilities of the client (an audit client)?1
4) How does the auditor determine the inherent risk, control risk, and detection risk of the
client?1
Solution
Answer – An audit programme is a detailed step wise plan to complete the audit work and it
includes testing and procedures to be followed while verifying items of financial statements.
Hence NO, audit programme does not include only testing to be done.
Answer - No, Audit program is not only an overall program for the entire engagement, but also it
covers objectives of each area. And it includes procedure and target time frame of each subset in
order to comply with audit objectives.
Answer – Some of the responsibilities of the audit client are like; compiling of financial
statements along with disclosing and describing each components. wheather assets, obligations,
and equities properly placed in financial statements. Client records show liabilities owed as of
the balance sheet date.
Answer – inherent risks involves material misstatement in financial statements. Some of major
reasons are involvement of judgment and estimation / audit of a newly formed institution as
compared to well established mfg concern.
Where as Control Risk is the risk of a material misstatement in the financial statements arising
due to absence or failure in the operation of relevant controls of the entity. Here organization
fails to put adequate control in business.
Detection Risk is the risk that the auditors fail to detect a material misstatement in the financial
statements. This risks can be controlled by improving sampling and population sizes..
The Auditors Responsibilities Relating to Fraud in an Audit of Financial Stat...Dr. Soheli Ghose Banerjee
This presentation is an overview of SA 240 (R). Prepared with Prof. S. Sircar.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
1) Does the audit program only include the testing that is to be don.pdfappua5
1) Does the audit program only include the testing that is to be done?1
2) Is the audit program an overall audit program for the entire engagement or does the audit
program have \"subsets\" for each area that we examine?1
3) What are the responsibilities of the client (an audit client)?1
4) How does the auditor determine the inherent risk, control risk, and detection risk of the
client?1
Solution
Answer – An audit programme is a detailed step wise plan to complete the audit work and it
includes testing and procedures to be followed while verifying items of financial statements.
Hence NO, audit programme does not include only testing to be done.
Answer - No, Audit program is not only an overall program for the entire engagement, but also it
covers objectives of each area. And it includes procedure and target time frame of each subset in
order to comply with audit objectives.
Answer – Some of the responsibilities of the audit client are like; compiling of financial
statements along with disclosing and describing each components. wheather assets, obligations,
and equities properly placed in financial statements. Client records show liabilities owed as of
the balance sheet date.
Answer – inherent risks involves material misstatement in financial statements. Some of major
reasons are involvement of judgment and estimation / audit of a newly formed institution as
compared to well established mfg concern.
Where as Control Risk is the risk of a material misstatement in the financial statements arising
due to absence or failure in the operation of relevant controls of the entity. Here organization
fails to put adequate control in business.
Detection Risk is the risk that the auditors fail to detect a material misstatement in the financial
statements. This risks can be controlled by improving sampling and population sizes..
The Auditors Responsibilities Relating to Fraud in an Audit of Financial Stat...Dr. Soheli Ghose Banerjee
This presentation is an overview of SA 240 (R). Prepared with Prof. S. Sircar.
Dr. Soheli Ghose ( Ph.D (University of Calcutta), M.Phil, M.Com, M.B.A., NET (JRF), B. Ed).
Assistant Professor, Department of Commerce,St. Xavier's College, Kolkata.
Guest Faculty, M.B.A. Finance, University of Calcutta, Kolkata
INTERNATIONAL STANDARD ON AUDITING 200 (REVISED)
OVERALL OBJECTIVES OF THE INDEPENDENT AUDITOR AND THE
CONDUCT OF AN AUDIT IN ACCORDANCE WITH INTERNATIONAL
STANDARDS ON AUDITING
A top-down approach begins at the financial statement level- It requir.docxjanettjz6sfehrle
A top-down approach begins at the financial statement level. It requires the auditor\'s understanding of the overall risk to internal control over financial reporting. Discuss how an auditor uses a top-down approach in the audit of internal control over financial reporting to select the controls to test. Compare and contrast a top-down approach versus a detailed approach in an audit. What would auditors gain from using a top-down approach?
Solution
Auditor should use top-down approach to the audit of internal control over financial reporting for selecting controls totest. The process begins with understanding overall risk to internal control. The auditor then focuses on entity-level controls and works down to significant accounts and disclosures and their relevant assertions. This approach directs the auditor\'s attention to accounts, disclosures, and assertions that present a reasonable possibility of material misstatement to the financial statements and related disclosures. The auditor then verifies his or her understanding of the risks in the company\'s processes and selects for testing those controls that sufficiently address the assessed risk of misstatement to each relevant assertion.
In Detailed audit approach each and every thing is been checked very minutely, this approach is designed to be used throughout the audit efficiently and effectively to focus on the nature, timing and extent of audit procedures in areas that are more responsible for material misstatement in the financial report.
It requires the auditor to first understand the entity and its environment in order to identify risks that may result in material misstatement in the financial statements and report. Then, auditor performs an assessment of those risks at both the financial report and assertion levels. The assessment involves considering a number of factors such as the nature of the risks, relevant internal controls and the required level of audit evidence.
It involves following steps
Understanding, which comes from identifying and assessing risk
Responding to identified risk
Concluding on areas of risk
Getting risk right which means acheaving Efficiency and effectiveness
Top down approach helps to get the understanding of entity its fianacial statemnst easily and in quite less time, with effeciency and effectivness. Top-down approach also analyzes risk by aggregating the impact of internal operational failures, as it is a three step process helps auditor to detect the frauds and risk easily and effeciently.
.
ICFR - Risk on material mis statements control objectives and control activitiesLokesh Chopra
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INTERNATIONAL STANDARD ON AUDITING 200 (REVISED)
OVERALL OBJECTIVES OF THE INDEPENDENT AUDITOR AND THE
CONDUCT OF AN AUDIT IN ACCORDANCE WITH INTERNATIONAL
STANDARDS ON AUDITING
A top-down approach begins at the financial statement level- It requir.docxjanettjz6sfehrle
A top-down approach begins at the financial statement level. It requires the auditor\'s understanding of the overall risk to internal control over financial reporting. Discuss how an auditor uses a top-down approach in the audit of internal control over financial reporting to select the controls to test. Compare and contrast a top-down approach versus a detailed approach in an audit. What would auditors gain from using a top-down approach?
Solution
Auditor should use top-down approach to the audit of internal control over financial reporting for selecting controls totest. The process begins with understanding overall risk to internal control. The auditor then focuses on entity-level controls and works down to significant accounts and disclosures and their relevant assertions. This approach directs the auditor\'s attention to accounts, disclosures, and assertions that present a reasonable possibility of material misstatement to the financial statements and related disclosures. The auditor then verifies his or her understanding of the risks in the company\'s processes and selects for testing those controls that sufficiently address the assessed risk of misstatement to each relevant assertion.
In Detailed audit approach each and every thing is been checked very minutely, this approach is designed to be used throughout the audit efficiently and effectively to focus on the nature, timing and extent of audit procedures in areas that are more responsible for material misstatement in the financial report.
It requires the auditor to first understand the entity and its environment in order to identify risks that may result in material misstatement in the financial statements and report. Then, auditor performs an assessment of those risks at both the financial report and assertion levels. The assessment involves considering a number of factors such as the nature of the risks, relevant internal controls and the required level of audit evidence.
It involves following steps
Understanding, which comes from identifying and assessing risk
Responding to identified risk
Concluding on areas of risk
Getting risk right which means acheaving Efficiency and effectiveness
Top down approach helps to get the understanding of entity its fianacial statemnst easily and in quite less time, with effeciency and effectivness. Top-down approach also analyzes risk by aggregating the impact of internal operational failures, as it is a three step process helps auditor to detect the frauds and risk easily and effeciently.
.
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Document is pertaining to ICFR development (requirement as per Companies Act'2013 containing basic risks and mitigating controls. Can be referred if you go for Internal Audits too.
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Information Security Management System (ISMS) auditing serves as an important principle in bridging the gap in information security risks controlling. In the role of ISMS Auditor, you incarnate the third party that impartially assesses whether the particular organization has already adopted the relevant rules, methods and measures to effectively overcome information security risks by implementing the set standards.
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Cultivating and maintaining discipline within teams is a critical differentiator for successful organisations.
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