This document summarizes the key steps in the audit process, including:
1. Pre-engagement activities such as accepting the client, preparing an engagement letter, and obtaining an initial understanding of the client.
2. Audit planning activities like understanding the client's business, evaluating risks, determining materiality, and designing audit procedures.
3. Audit fieldwork including performing analytical procedures, substantive testing, and documenting conclusions.
4. Finalizing the audit through review of workpapers, evaluating differences, obtaining financial statements, and issuing the audit report.
This document summarizes the key steps in the audit process, including:
1. Pre-engagement activities such as accepting the client, preparing an engagement letter, and obtaining an initial understanding of the client.
2. Audit planning activities like understanding the client's business, evaluating risks, determining materiality, and designing audit procedures.
3. Audit fieldwork including performing analytical procedures, substantive testing, and documenting conclusions.
4. Finalizing the audit through review of workpapers, evaluating differences, obtaining financial statements, and issuing the audit report.
This document summarizes the key steps in the audit process, including:
1. Pre-engagement activities such as accepting the client, preparing an engagement letter, and obtaining an initial understanding of the client.
2. Audit planning activities like understanding the client's business, evaluating risks, determining materiality, and designing audit procedures.
3. Audit fieldwork including performing analytical procedures, substantive testing, and documenting conclusions.
4. Finalizing the audit through review of workpapers, evaluating differences, obtaining financial statements, and issuing the audit report.
Function Title Reference 1. Acceptance of client. AP 1 Engagement Acceptance Obtain preliminary Form (for new clients) Sections 3.1 and understanding of client’s 3.2 business and assess AP 2 Client Continuation Form risk/benefit of (for existing clients) Section 3.1 acceptance. 2. Prepare Audit Engagement Letter Letter 1 Engagement Letter Section 3.3 and/or contract.
Audit Planning Activities
Volume II – Form # and Volume I
Function Title Reference 1. Obtain in-depth AP 3a Knowledge of Client’s understanding of Business client’s business and AP 3b Knowledge of Client’s Sections 4.2 and internal control Internal Control System 4.3 structure. AP 3c Knowledge of Client’s Accounting and Financial Reporting Systems AP 3d Walk-Through Checklist AP 3e Financial Reporting Documentation Form
2. Perform evaluation of AP 3h Questionnaire for Risk of
control and inherent Fraud Section 4.4 risk. AP 3j Inherent and Combined Risk Assessment Form 3. Determine materiality AP 3f Materiality Worksheet for limits. Audit Planning Purposes Section 4.5 4. Determine the audit AP 3g Planning Worksheet to approach Determine Extent of Substantive Section 4.6 Testing 5. Design substantive AP 10 – 80 Audit Work Programs tests (should be modified for specific Section 5 engagement) 6. Assign audit personnel and prepare a time AP 3i Personnel Assignment and Section 4.7 budget for audit work Time Budget for the Audit
Audit Fieldwork Activities
Volume II – Form # and Volume I
Function Title Reference 1. Perform analytical Audit Work Programs (modified procedures and for specific engagement): Section 6.1. 6.2 substantive testing. AP 10 Cash and 6.3 AP 15 Accounts Receivable and Sales AP 20 Prepaid Expenses and Other Assets AP 25 Investments AP 30 Inventories AP 32 Physical Inventory Counts AP 35 Fixed Assets AP 50 Accounts Payable and Purchases AP 55 Accrued Liabilities AP 60 Debt AP 70 Revenue and Expense AP 80 Equity AP 4a Summary of Audit Differences C-1 through C-4 Sample Audit Confirmations 2. Document audit procedures performed Section 6.4 and and conclusions Appendix II reached. Finalizing the Audit
Volume II – Form # and Volume I
Function Title Reference 1. Review audit working papers at appropriate All documentation prepared in Section 6.4 levels (in accordance planning and conducting the audit with firm policy). work.
2. Evaluate audit AP 4b Evaluation of Audit
differences. Differences Section 7 3. Obtain and review financial statements AP 125 Audit Report Checklist Section 8 prepared by the client (or assist client in preparing). 4. Perform audit AP 100 Subsequent Events conclusion procedures: AP 105 Contingencies and Perform review of Litigation Section 8 subsequent events and AP 110 Audit Review and contingencies. Approval Form Consider going AP 115 Audit Completion concern assumption. Questionnaire Obtain Management AP 120 Going Concern Representation Letter Questionnaire and Legal Letter 2 Management Representation Letter. Representation Letter Perform final Review Letter 3 Legal Representation and Approval. Letter
5. Issue the Audit Example Audit Reports 1-11 Section 9