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    1) It is necessary to assess risks of material misstatements before obtaining evidence to address those risks. This allows auditors to plan the audit effectively and efficiently. 2) Responses to assessed risks can occur at the financial statement level through professional skepticism and ensuring independence, and through audit procedures like tests of controls and substantive procedures. 3) Obtaining audit evidence is important to achieve the objectives of providing an opinion on whether financial statements are free from material misstatements and in accordance with standards. Screenshots are not considered sufficient or appropriate audit evidence on their own.

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    AUDITING RISK RESPONSE

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    1) It is necessary to assess risks of material misstatements before obtaining evidence to address those risks. This allows auditors to plan the audit effectively and efficiently. 2) Responses to assessed risks can occur at the financial statement level through professional skepticism and ensuring independence, and through audit procedures like tests of controls and substantive procedures. 3) Obtaining audit evidence is important to achieve the objectives of providing an opinion on whether financial statements are free from material misstatements and in accordance with standards. Screenshots are not considered sufficient or appropriate audit evidence on their own.

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    5 views2 pages

    Auditing Risk Response

    Uploaded by

    Ath
    1) It is necessary to assess risks of material misstatements before obtaining evidence to address those risks. This allows auditors to plan the audit effectively and efficiently. 2) Responses to assessed risks can occur at the financial statement level through professional skepticism and ensuring independence, and through audit procedures like tests of controls and substantive procedures. 3) Obtaining audit evidence is important to achieve the objectives of providing an opinion on whether financial statements are free from material misstatements and in accordance with standards. Screenshots are not considered sufficient or appropriate audit evidence on their own.

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    of 2

    DESIGNING AN EFFECTIVE RESPONSE TO ASSESSED conflict of interest with the

    RISKS company.
    Is it necessary to assess first the risk of material ○ One must remain independent
    misstatements before obtaining evidence that in fact and in appearance.
    addresses such risks? ● Review of accounting principles
    ● Yes, because this would allow auditors to ○ Guidelines the company has
    evaluate and know the situation first. We have set for the treatment of the
    to plan the audit in a way that doesn’t accounting rules for the
    compromise the procedures. An hour of financial statements.
    planning will save us ten hours of doing. ○ We should check the policies
    regularly so that we could
    Types of Responses apply the new ones
    established accordingly.
    ● Plan the nature, timing, and extent of
    audit procedures.
    ○ -

    1. FINANCIAL STATEMENT LEVEL


    ● Professional skepticism
    ○ Attitude that includes a
    questioning mind and a critical
    assessment of audit evidence 2. AUDIT PROCEDURES
    ○ We don’t accept things at face ● Test of controls
    value. We should do so once ○ Evaluate whether accounting
    we determine that there’s control are in place
    something wrong with the ■ No trail (observation,
    financial statements. We have inquiry) - Inquiry is
    to know and verify their seeking more
    explanations. information.
    ● Team composition Confirmation is
    ○ There should be a delegation verifying.
    of tasks that is according to the ■ Documentary trail
    needs of the clients. (inspection)
    ○ We should be assessing the risk ● Substantive procedures
    first before figuring out how ○ Used to detect material
    big of a team should be misstatements
    handling the multi-billion ○ The amount matters
    company. ■ Substantive analytical -
    ○ One has to review the This will be the first
    principles to be aware of when procedure. If we are
    to decline offers that allow you not satisfied, we will
    to be biased or engage in a extend the substantive
    procedures.
    ■ Test of details
    ● Transactions
    (count, inspect)
    ● Balances
    (confirm,
    recompute)

    ● Audit sampling is used because it allows the


    AUDIT OBJECTIVES
    auditor to draw conclusions about
    (1) Provide an opinion whether the financial
    statements are free from material transactions or account balances without
    misstatements, whether due to fraud or sustaining the time and cost of examining all
    error. available data.
    (2) Identify if it is in accordance with the ● Reasonable assurance is the same with high-
    Philippine financial reporting standards. level assurance.

    IMPLEMENTING THE DESIGNED RISK RESPONSE AND


    OBTAINING AUDIT EVIDENCE
    Are screenshots taken from the CEO’s social media
    accounts considered as audit evidence?
    ● No, because it is not sufficient and
    appropriate. It can easily be manipulated or
    faked. It is more preferable to refer to original
    records because these were done by
    professionals and these are official documents.

    BASIC AUDIT SAMPLING

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