Audit Process

Topics: Auditing, Audit, Internal control Pages: 4 (448 words) Published: January 9, 2014
Audit Process

Typically an audit flows through a series of logical steps culminating in the ‘Audit Report’.

Background Research

Preparation of the Audit Plan

Accounting Systems review

Internal Control System review

Substantive Testing

Analytical review techniques

Analytical review of financial statements

Preparation and signing of the Audit Report

Background Research

1. Present condition and future prospects for the industry
2. History, present and future prospects of client
3. Key management and personnel, changes thereto
4. Products, services, processes of client
5. Location(s) of operations
6. Significant difficulties – manufacturing, sourcing, loss of customers, for-ex, oil prices etc 7. Problems in accounting and internal control systems
8. Specific accounting issues eg inventory valuation, intangibles, pensions, deferred tax, derivatives, securitisation

9. Problems likely to increase audit risk – LTCWIP, Sub-prime, Oil & Gas reserves 10. Logistical problems – multiple locations, language, time requirements, stocktaking attendance 11. Changes in legislation, regulatory regime etc

Bulk of the background research conducted by reading or interviewing;

Previous year’s files

Audit staff previously engaged in the audit

Published material

Trading statements, interim reports, annual reports, internal management reports

Management & Key personnel

The Audit Plan

Outline of the audit work to be done in each area

Staff and staffing

Location(s) of the audit

Timing of the work to be done

Budget of times and costs

Accounting Systems Review

Ascertain and record the system and corroborate the details.

Consider the adequacy of the system.

Test the system.

Evaluate and conclude on adequacy.

Internal Control System Review

Ascertain and record the system and corroborate the details.

Consider the adequacy of the system.

Test the system.

Evaluate and conclude on...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Essay about Audit
  • Audit Committee Essay
  • ACC 546 Audit Report Essay
  • Essay on Acca F8 Audit
  • Audit Engagment Letter Essay
  • Essay about Audit Report Apollo Shoes
  • Audit Program Design Part Ii
  • Essay about Audit and Auditing Process

Become a StudyMode Member

Sign Up - It's Free