um Sized Practices.pptVIP

Training Seminar:Students of Small and Medium Sized PracticesFebruary 17, 2007 Outline of the Day Introduction to Risk ISA 315 “Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement” Responses to Risk ISA 330 “Responses to Risk” Practical aspects of Planning the Audit Work ISA 300/320 In other words… ISA 240/315 What could go wrong? ISA 330 What are we going to do about it? Why? Our Responsibilities ‘An auditor is not bound to be a detective, or, as was said, to approach his work with suspicion or with a foregone conclusion that there is something wrong. He is a watchdog but not a bloodhound.’ Re: Kingston Cotton Mill CO (No 2) 1896 The Standard The Audit Definition of Risk ISA 315 - Overview (Para 2, ISA 315) “The auditor should obtain an understanding of the entity and its environment, including its internal control, sufficient to identify and assess the risks of material misstatement of the financial statements whether due to fraud or error, and sufficient to design and perform further audit procedures” Requirements of ISA 315 OVERALL REQUIREMENTS Risk Assessment “…continuous, dynamic process of gathering, updating and analysing information throughout the audit” (Para 6, ISA 315) Planning Meeting Risk assessment procedures: Enquiries of management and others within the entity Analytical procedures Observation and inspection ISA 330 - requirements Overall responses to risks of material misstatement at the financial statement level Audit procedures responsive to risks of material misstatement at the assertion level Evaluating the sufficiency and appropriateness of audit evidence obtained Documentation Assertions – how much do you know? PL Occurrence Completeness Accuracy Cutoff Classification BS Existence Completeness Rights Obligations Valuation Presentation Disclosure Assessing the risk of material misstatement General Risks and General Controls General Risks are those risks that af