Chapter 05

AUDITING 10/7/2020
Professional Auditing Standards

CHAPTER
5 and the Audit Opinion
Formulation Process
Johnstone, Auditing: A Risk-Based Approach, 11th Edition. ©2019 Cengage. All Rights Reserved. May
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not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Learning Objectives
LO 1 Identify and compare the auditing standards that provide guidance on the
audit opinion formulation process.
LO 2 List and discuss the foundational principles underlying the auditing standards.
LO 3 List the phases and related activities in the audit opinion formulation process.
LO 4 Explain the concept of accounting cycles and discuss their importance to the
audit opinion formulation process.
LO 5 Describe the assertions integral to the financial statements and explain their
importance to the audit opinion formulation process.
LO 6 Define audit evidence and describe the purpose of audit procedures used to
obtain audit evidence.
LO 7 Discuss the importance of audit documentation and provide examples.
LO 8 Discuss audit activities in each of the five phases of the audit opinion
formulation process.
LO 9 Apply the frameworks for professional decision making and ethical decision
making for decisions made when conducting an audit.
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CHAPTER 5 1
AUDITING 10/7/2020
What Do You Think? (p. 172)

● It seems that in the SEC case against RSM and its employees, Millmann and
Hanmer, there were failures on the part of many parties to fulfil their
professional obligations in a variety of ways. Think about RSM as a whole.
● Why would it neglect basic rules of professionalism in terms of client
acceptance, risk assessment, and training of its personnel?
● Think about Millmann. Why would he essentially delegate the audit
partner responsibilities to an audit manager who also did not have
experience auditing these kinds of funds?
● Think about Hanmer. She was in the process of going up for partner at
RSM, and yet knowingly subverted the legitimate comments of the
concurring partner reviewer.
● Why would she engage in such unethical behavior at such a critical
juncture in her career?
3
Professional Auditing Standards

● Auditors in the United States follow auditing guidance issued
by:
● American Institute of Certified Public Accountants (AICPA)
● Public Company Accounting Oversight Board (PCAOB)
● International Auditing and Assurance Standards Board (IAASB)
● Common objective
● Provide assurance to public that audits are conducted in a quality
manner
● Application of auditing standards
● Developing and communicating an opinion on financial statements
● As part of an integrated audit on a client’s internal control over
financial reporting.
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AUDITING 10/7/2020
Auditing Standards Issued by the AICPA and IAASB

● Both AICPA and IAASB use the following format for
auditing standards:
● Introduction explains the purpose and scope of the standard.
● Objective defines context in which requirements are set.
● Definitions include specific meanings of terms in the standards.
● Requirements identify what the auditor is required to do to
achieve the objective of the standard.
● Application and Other Explanatory Material include cross-
references to the requirements and provide further guidance
for applying the requirements of the standard.
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PCAOB Standards
● The PCAOB’s standards do not necessarily attempt to
converge with the AICPA and the IAASB.
● Organized by topical areas that follow the flow of the audit
opinion formulation process
● Numbering convention
● Purposely different from the convention used by the AICPA and IAASB
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AUDITING 10/7/2020
Exhibit 5.1
7

● While the AICPA and IAASB are committed towards
convergence, the PCAOB’s standards do not necessarily
attempt to converge with the standards of the AICPA and the
IAASB.
● Why do you think that the PCAOB might not focus on convergence?
● What barriers might there be to a more harmonized structure for the
three sets of auditing standards?
● Do you think that the PCAOB’s responsibilities for inspections and
enforcement might affect their decision not to attempt to converge
their standards with those of the AICPA and IAASB?
● What challenges might the existence of multiple standards have on
audit firms, students, and instructors?
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AUDITING 10/7/2020
Check Your Basic Knowledge—True/False

5-1 Auditors of U.S. public companies should follow the
PCAOB’s auditing standards. (T/F)
5-2 There is not much overlap; i.e., things in common among
the auditing standards set by the PCAOB, AICPA, and IAASB.
(T/F)
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Check Your Basic Knowledge (5-3)

5-3 Which of the following statements is true regarding
auditing standard setting in the United States?
a. The AICPA is responsible for setting auditing standards
for audits of nonpublic entities.
b. The PCAOB is responsible for setting auditing standards
for audits of public companies.
c. The AICPA is responsible for setting auditing standards
for audits of both public and nonpublic companies.
d. The SEC sets auditing standards for auditors of public
and nonpublic companies.
e. Both (a) and (b) are correct.
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5-4 The following describes a situation in which an auditor has to
determine the most appropriate standards to follow. The
audited company is headquartered in Paris but has substantial
operations within the United States (60% of all operations) and
has securities registered with the SEC and is traded on the New
York Stock Exchange (NYSE). The company uses International
Financial Reporting Standards (IFRS) for its accounting
framework. What would be the most appropriate set of auditing
standards to follow?
a. PCAOB.
b. Either PCAOB or AICPA.
c. Either IAASB or AICPA.
d. Only the AICPA standards would be appropriate.
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Principles Underlying the Auditing Standards

● The PCAOB, AICPA, and IAASB each have somewhat
different underlying principles and objectives.
● While the specific wording differs across standards
setters, the fundamental tenant is that audits must be
conducted in a quality manner.
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AUDITING 10/7/2020
PCAOB Guidance—
Five Topical Categories of Standards
1. General Auditing Standards
2. Audit Procedures
3. Auditor Reporting
4. Matters Relating to Filings Under Federal Securities Laws
5. Other Matters Associated with Audits
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AICPA Guidance:
Principles Governing an Audit
● AICPA has developed seven fundamental principles that
govern audits.
● The principles are included in four categories
● Purpose of an audit and premise upon which an audit is
conducted (1 and 2)
● Responsibilities (3)
● Performance (4, 5 and 6)
● Reporting (7)
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AUDITING 10/7/2020
IAASB Guidance:
Objectives of an Audit
● In conducting an audit of financial statements, the overall
objectives of the auditor are as follows:
a. To obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement,
whether due to fraud or error, thereby enabling the auditor to
express an opinion on whether the financial statements are
prepared, in all material respects, in accordance with an
applicable financial reporting framework; and
b. To report on the financial statements, and communicate as
required by the ISAs, in accordance with the auditor’s findings.
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5-5 The AICPA’s and PCAOB’s standards underlying an audit are
the same, and each contain four categories of standards.
(T/F)
5-6 The purpose of an audit is to enhance the degree of
confidence that users can place on the financial
statements. (T/F)
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AUDITING 10/7/2020

5-7 Which of the following statements is false?
a. The purpose of an audit is to enhance the degree of
confidence that managers can place in the financial
statements, thereby facilitating their decision making.
b. Auditors are responsible for having the appropriate
competence and capabilities to perform the audit, should
comply with ethical requirements, and maintain professional
skepticism throughout the audit.
c. The auditor needs to obtain reasonable assurance as to
whether the financial statements are free from material
misstatement.
d. An audit has inherent limitations such that the auditor is not
able to obtain absolute assurance about whether the
financial statements are free from misstatement.
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17

5-8 Which of the following is included as part of the AICPA’s
principles governing an audit?
a. Auditors need to obtain a high level of assurance that
the financial statements are free of all misstatements.
b. An audit has inherent limitations such that the auditor
cannot provide absolute assurance about whether the
financial statements are free of misstatement.
c. Auditors need to maintain professional skepticism only
on audits where there is a high risk of material
misstatement.
d. All of the above are included as part of the AICPA’s
principles governing an audit.
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CHAPTER 5 9
AUDITING 10/7/2020
Overview of the Audit Opinion Formulation Process

Phase I Making Client Acceptance and Continuance
Decisions
Phase II Performing Risk Assessment
Phase III Obtaining Evidence About Internal Control
Operating Effectiveness
Phase IV Obtaining Substantive Evidence About Accounts,
Disclosures, and Assertions
Phase V Completing the Audit and Making Reporting
Decisions
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Exhibit 5.2
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CHAPTER 5 10
AUDITING 10/7/2020
Exhibit 5.3
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21

5-9 An important precursor to implementing the audit opinion
formulation process includes management’s
acknowledgement that they have important
responsibilities for internal control over financial reporting
and the financial statements. (T/F)
5-10 The audit opinion formulation process consists of five
phases, all of which must be performed on every audit
engagement, regardless of the client’s public trading status.
(T/F)
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5-11 Which of the following statements is true about the audit
opinion formulation process presented in this chapter?
a. The audit opinion formulation process is different for
the financial statement only audit and the integrated
audit.
b. The audit opinion formulation process is based on the
premise that management has responsibility to prepare
the financial statements and maintain internal control
over financial reporting.
c. The audit opinion formulation process is comprised of
seven phases.
d. All of the above are true statements regarding the audit
opinion formulation process.
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23

5-12 Which of the following activities is not part of the activities
within the audit opinion formulation process?
a. The auditor develops a common understanding of the
audit engagement with the client.
b. The auditor determines the appropriate nonaudit
consulting services to provide to the client.
c. The auditor identifies and assesses risks of material
misstatements and then responds to those identified
risks.
d. The auditor determines the appropriate audit opinion(s)
to issue.
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AUDITING 10/7/2020
Audit Opinion Formulation Process:

Accounting Cycles
● Similar transactions that are linked by procedures and controls
and that affect related accounts
● Convenient way to break the audit up into manageable
sections of related accounts
● Individual auditors or teams of auditors are typically assigned
to audit a particular accounting cycle
● Auditor focuses on:
● Flow of transactions within a particular cycle
● Identifying:
● Points where material misstatement can occur
● Controls that have been designed and implemented to mitigate those
risks
● Understanding risks and controls within each cycle
● Helps determine specific audit procedures to be used and specific audit
evidence to be obtained
25
25
Exhibit 5.4
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AUDITING 10/7/2020

5-13 The cycle approach to auditing provides a way for breaking
the audit up into manageable components. (T/F)
5-14 Within a particular cycle, the auditor focuses on the flow of
transactions within that cycle, including how transactions
are initiated, authorized, recorded, and reported. (T/F)
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27

5-15 Which of the following is a reason that the auditor uses an
accounting cycle approach when performing an audit?
a. The accounting cycle approach allows the auditor to
focus exclusively on either the balance sheet or the
income statement.
b. COSO internal control components are based on the
accounting cycles.
c. The accounting cycles provide a convenient way to break
the audit up into manageable pieces.
d. The auditor needs to be able to provide an opinion
related to each accounting cycle.
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AUDITING 10/7/2020

5-16 Which of the following accounts would not be included in
the Acquisition and Payment for Long-Lived Assets Cycle?
a. Revenue.
b. Depreciation expense.
c. Gain on disposal.
d. Equipment.
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29

Financial Statement Assertions
Assertion Refers to
Existence or Occurrence • Existence of assets and liabilities
• Occurrence of recorded transactions
Completeness • Inclusion of all transactions and accounts in financial
statements
Rights and Obligations • Assets being the rights of an organization
• Liabilities being the obligations of an organization
Valuation or Allocation • Inclusion of accounts in financial statements at
appropriate amounts
Presentation and Disclosure • Components of financial statement being properly
classified, described, and disclosed
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CHAPTER 5 15
AUDITING 10/7/2020
Exhibit 5.5
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31

5-17 The completeness assertion is typically the more relevant
assertion for assets and revenue. (T/F)
5-18 A classic inventory fraud involves management
understating ending inventory, thereby yielding a reduction
in cost of goods sold and an overstatement of profitability.
(T/F)
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5-19 Which of the following is not a management assertion?
a. Completeness.
b. Existence.
c. Rights and obligations.
d. Valuation.
e. Placement.
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5-20 Which management assertion is usually most relevant for
liability accounts?
a. Completeness.
b. Existence.
c. Rights and obligations.
d. Presentation and disclosure.
e. None of the above address whether the components of
the financial statements are properly classified,
described, and disclosed.
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AUDITING 10/7/2020

Audit Evidence and Audit Procedures
● Audit evidence
● Audit procedures
● Risk assessment procedures
● Tests of controls
● Substantive procedures
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Evidence Example: Substantive Audit Procedures to Obtain

Evidence About Management’s Valuation Assertion
● The valuation of new assets added this year
● The valuation of assets that were acquired in previous
years
● The proper recording of depreciation
● Potential impairment of the existing assets
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AUDITING 10/7/2020

5-21 Risk assessment procedures provide sufficient appropriate
audit evidence on which to base an audit opinion. (T/F)
5-22 The auditor’s selection of audit procedures depends on the
accounts and assertions the auditor is testing. (T/F)
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37

5-23 Audit procedures fall into three categories. Which of the
following is not a category of audit procedures?
a. Risk assessment procedures.
b. Tests of risks.
c. Tests of controls.
d. Substantive procedures.
e. All of the above are categories of audit procedures.
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AUDITING 10/7/2020

5-24 Which of the following is a true statement regarding audit
evidence and audit procedures?
a. The auditor has a responsibility to design and perform
audit procedures to obtain sufficient appropriate audit
evidence.
b. Inquiry is a type of audit procedure that typically does
not require the auditor to perform additional
procedures.
c. Substantive procedures are performed to test the
operating effectiveness of a client’s internal control.
d. Risk assessment procedures alone provide sufficient
appropriate audit evidence on which to base an audit
opinion.
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39

Audit Documentation
● Audit documentation
● Also called working papers or workpapers
● Provides evidence that the audit was planned and performed
in accordance with auditing standards
● Serves other purposes
● Examples of audit documentation include:
● Audit programs summarizing the procedures performed by the
auditor
● Analyses prepared by the client or the auditor
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AUDITING 10/7/2020

5-25 The PCAOB, but not the AICPA, requires auditors to prepare
audit documentation. (T/F)
5-26 Audit checklists and audit programs are examples of audit
documentation. (T/F)
41
41

5-27 Which of the following information should be included in
audit documentation?
a. Procedures performed.
b. Audit evidence examined.
c. Conclusions reached with respect to relevant financial
statement assertions.
d. All of the above should be included.
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AUDITING 10/7/2020

5-28 Which of the following statements is false regarding audit
documentation?
a. An audit program is an example of audit documentation.
b. The only purpose of audit documentation is to provide
evidence that the audit was planned and performed in
accordance with auditing standards.
c. Audit documentation helps facilitate internal and
external inspections of completed audits.
d. Audit documentation is required on all audit
engagements.
43
43

● Review the data on page 188 that details information from the Audit
Analytics database about auditor and client changes based on audit
firm portfolio management and client decision making.
● As an example of how to interpret this data, it appears that in the
first quarter of 2017, Deloitte has attracted nine publicly traded
clients, while each of the other Big 4 have lost 18, with notable gains
by Crowe and EisnerAmper.
● Why might a client shift from one Big 4 firm to another?
● Why might a client shift from a non-Big 4 firm to a Big 4 firm?
● Why might a client shift from a Big 4 firm to a non-Big 4 firm?
● Speculate as to potential auditing pricing differences (or lack thereof)
based on these client shifts in the audit firm market. Should an audit
cost the same regardless of the audit firm that provides it?
● What are potential implications of the fact that Deloitte has gained nine
publicly traded clients in this period as compared to its competitors?
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CHAPTER 5 22
AUDITING 10/7/2020
Phase I - Making Client Acceptance and Continuance

Decisions
● In making client acceptance and continuance decisions, the
auditor will perform various procedures in assessing the client,
including:
● Inquire of client and audit firm personnel whether there are any
potential independence-impairing relationships
● Obtain background checks on management to assess management
integrity
● Perform a review of any questionable accounting policies that might
indicate management’s lack of commitment to GAAP
● Review regulatory filings and inquire of management about any
internal control deficiencies
● Analyze client and industry financial statements to assess the
possibility of business failure
● Assess the background and experience of the potential client’s
accounting personnel
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45

5-29 Audit firm portfolio management decisions are influenced
only by audit fee considerations. (T/F)
5-30 Auditors are required to perform an audit for any
organization that needs one. (T/F)
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AUDITING 10/7/2020

5-31 Which of the following factors would an auditor typically
not consider when making a client acceptance decision?
a. Any potential independence-impairing relationships.
b. Any internal control deficiencies.
c. Management’s commitment to GAAP.
d. Management integrity.
e. An auditor would consider all of the above factors.
47
47

5-32 Which of the following statements regarding client
acceptance/continuance decisions is false?
a. An audit firm’s client portfolio is impacted by both audit
firm decisions and client decisions.
b. It would not be appropriate for audit firms to perform
background checks on management of a potential client.
c. Auditors are not required to perform audits for any
organization that asks for an audit.
d. Auditors should assess the background and experience
of accounting personnel of a potential client.
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AUDITING 10/7/2020
Phase II - Performing Risk Assessment

● Identifying and assessing risks of material misstatement
● Requires identification of significant accounts, disclosures,
relevant assertions
● Auditor establishes a materiality level overall and for specific
accounts and disclosures
● Inherent risk
● Control risk
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Exhibit 5.6
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CHAPTER 5 25
AUDITING 10/7/2020

● We can probably all agree that risk assessment during the
planning phase of the audit is important, because that
assessment determines the auditors’ planned procedures
to address assessed risk.
● But, what are the implications if the audit team “gets it
wrong” and assesses client risks inaccurately–either too
low or too high?
51
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Risk Assessments Procedures

● Risk assessment procedures typically include:
● Inquiries of management and others within the entity who
may have information to assist in identifying risks of material
misstatement due to fraud or error
● Planning analytical procedures
● Observation (such as watching an organization’s operations,
facilities, or premises) and inspection of documentation (e.g.,
reviewing business plans, internal control manuals, or
management reports)
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AUDITING 10/7/2020
Control Risk Assessment

● Focuses on design effectiveness and implementation
● High control risk
● Weak or ineffective internal controls
● Auditor cannot rely on controls to reduce substantive
procedures for account balances
● Low control risk
● Effective internal controls
● Auditor will test operating effectiveness of controls to reduce
substantive procedures for account balances
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Responding to Identified Risks of Material

Misstatement
● Purpose of risk assessment procedures
● Identify risks of material misstatement
● Determine where misstatements in financial statements may
occur
● Design appropriate audit strategy
● Controls reliance audit: Includes tests of controls and
substantive procedures
● Substantive audit: Includes substantive procedures and
does not include tests of controls
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CHAPTER 5 27
AUDITING 10/7/2020
Exhibit 5.7
55
55

5-33 In conducting a substantive audit, the auditor uses only
substantive procedures, and does not rely on tests of
internal controls. (T/F)
5-34 The auditor assesses the risk of material misstatement at
only the account level. (T/F)
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AUDITING 10/7/2020

5-35 Which of the following statements is true regarding the
design of controls related to credit limits?
a. The effectiveness of the control design is contingent on
the credit manager’s process for establishing and
reviewing credit limits.
b. Because the process of establishing credit limits is fairly
time consuming, the control should be designed so that
the marketing manager has the ability to approve sales
on an ad hoc basis while waiting for the credit approval.
c. The control should be designed so that the sales
manager has final approval regarding credit limits.
d. All are true statements regarding the design of controls
related to credit limits.
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5-36 The baseline for quality financial reporting is that the
organization will have controls over which of the following?
a. Significant, unusual transactions, particularly those that
result in late or unusual journal entries.
b. Top-side journal entries.
c. Related-party transactions.
d. Significant management estimates.
e. All of the above.
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AUDITING 10/7/2020
PHASE III - Obtaining Evidence about Internal

Control Operating Effectiveness
● Auditor tests controls to determine whether controls are
operating effectively
● At year-end (for opinion on internal control effectiveness)
● Throughout the year (for the financial statement audit)
● Selecting controls to test
● Performing tests of controls
● Inquiry
● Observation
● Inspecting relevant documentation
● Reperforming a control
● Considering the results of tests of controls
● Summary of audit decisions prior to determining substantive
procedures
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Exhibit 5.8
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AUDITING 10/7/2020
Exhibit 5.9
● Refer to Exhibit 5.9 for
examples of possible
tests of controls
61
61
Exhibit 5.10
● A summary of important
audit activities and decisions
leading up to the
performance of substantive
procedures appears in
Exhibit 5.10.
62
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AUDITING 10/7/2020

● Review the three examples presented in the Why It
Matters feature “The Need for Performing Tests of
Controls and Considering the Results.”
● What are the audit quality implications of not performing the
procedures noted in that feature?
● Do you think that these deficiencies rise to the level of an
‘audit failure,’ i.e., issuing an unqualified audit opinion on
financial statements that are materially misstated?
● Do you think that the auditors who were the subject of these
inspections would necessarily agree with the PCAOB’s
assessments of these supposed audit failures? Why or why
not?
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63

5-37 One valid approach to testing controls over credit review
and approval for customers that are granted credit involves
taking a sample of customer orders and tracing them
through the system to determine whether: (a) there was
proper review of credit and (b) credit authorization or
denial was proper. (T/F)
5-38 The results of the tests of controls allow the auditor to
determine how much assurance about the reliability of
account balances can be obtained from the effective
operation of controls. (T/F)
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AUDITING 10/7/2020

5-39 What actions should auditors take if they identify control
deficiencies at their client?
a. Assess the severity of those deficiencies.
b. Determine whether and how the preliminary control risk
assessment should be modified.
c. Provide documentation about the effect of the control
risk assessment on modifications to substantive
procedures.
d. Actions (a), (b), and (c) are all appropriate.
e. Only (a) and (c) are appropriate.
65
65

5-40 In testing controls over adjusting journal entries, which of
the following would the auditor likely review?
a. Supporting documentation for the entry.
b. Evidence proving that the entry is material.
c. Evidence that the debits and credits are to appropriate
accounts.
d. All of the above.
e. Only two of the above (a–c) are appropriate.
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AUDITING 10/7/2020
Phase IV - Obtaining Substantive Evidence about

Accounts, Disclosures, and Assertions
● Substantive procedures include:
● Substantive analytical procedures
● Tests of details of account balances
● Considerations in determining appropriate substantive
procedures:
● Source of potential misstatement
● Extent and type of potential misstatement
● Example: Effect of Nature of Misstatements on Audit
Procedures
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67
Exhibit 5.11
68
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AUDITING 10/7/2020

5-41 The auditor is expected to perform substantive procedures
for each relevant assertion of each significant account and
disclosure. (T/F)
5-42 Substantive procedures include substantive analytical
procedures and tests of details. (T/F)
69
69

5-43 In performing substantive procedures, which of the
following statements provides appropriate guidance to the
auditor?
a. The auditor can perform both substantive analytical
procedures and substantive tests of details.
b. The auditor should perform substantive procedures for all
assertions of all financial statement accounts.
c. The auditor should perform more (or more rigorous)
substantive procedures when control risk is low than when
control risk is high.
d. All of the above statements provide appropriate guidance.
e. Only two of the above statements (a–c) provide appropriate
guidance.
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AUDITING 10/7/2020

5-44 In which of the following scenarios is the auditor most
likely to obtain more (or more rigorous) substantive
evidence?
a. When subjectivity related to the assertion is low.
b. When controls are determined to be operating
effectively.
c. When the account is immaterial.
d. When the design of controls is determined to be
ineffective.
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Phase V - Completing the Audit and Making

Reporting Decisions
● Completing various review and communication activities
● Making a decision about what types of opinions should
be issued
● Deciding on the appropriate opinion to be issued
● It can be based on financial statements and internal control
● It can be issued in one report or in two separate reports
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AUDITING 10/7/2020
Exhibit 5.12
● Exhibit 5.12 provides an
example of an audit report
with an unqualified opinion
on the financial statements
and an adverse opinion on
internal control.
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73

5-45 Once the auditor completes the substantive procedures in
Phase IV, the auditor is in a position to issue the audit
opinion. (T/F)
5-46 If the auditor issues an opinion on the client’s internal
controls and the client’s financial statements, the auditor is
required to issue two separate reports. (T/F)
74
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AUDITING 10/7/2020

5-47 Which of the following procedures is least likely to be
performed during Phase V of the audit opinion formulation
process?
a. Assessment of misstatements detected during the
performance of substantive procedures and tests of
controls.
b. Performance of preliminary analytical review
procedures.
c. Performance of an engagement quality review.
d. Determination of the appropriate audit opinion(s) to
issue.
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75

5-48 Which of the following statements is true regarding the
auditor’s report on a public company’s internal control over
financial reporting?
a. The audit report will indicate whether it was the company or
the auditor that initially identified the indicated material
weakness.
b. The auditor must explicitly reference the criteria for
evaluating internal control using, for example, the COSO
framework.
c. The audit is performed in conjunction with the auditing
standards promulgated by the AICPA’s ASB.
d. The auditor must report on whether management used the
appropriate tools in its assessment of internal control over
financial reporting.
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CHAPTER 5 38

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AUDITING 10/7/2020

Professional Auditing Standards

What Do You Think? (p. 172)

Professional Auditing Standards

Auditing Standards Issued by the AICPA and IAASB

What Do You Think? (p. 174)

Check Your Basic Knowledge—True/False

Check Your Basic Knowledge (5-3)

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Principles Underlying the Auditing Standards

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Overview of the Audit Opinion Formulation Process

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Audit Opinion Formulation Process:

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Audit Opinion Formulation Process:

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Audit Opinion Formulation Process:

Evidence Example: Substantive Audit Procedures to Obtain

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Audit Opinion Formulation Process:

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What Do You Think? (p. 188)

Phase I - Making Client Acceptance and Continuance

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Phase II - Performing Risk Assessment

What Do You Think? (p. 189)

Risk Assessments Procedures

Control Risk Assessment

Responding to Identified Risks of Material

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PHASE III - Obtaining Evidence about Internal

What Do You Think? (p. 199)

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Phase IV - Obtaining Substantive Evidence about

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Phase V - Completing the Audit and Making

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