Chartered Accountants Audit Conference - PowerPoint PPT Presentation

Loading...

PPT – Chartered Accountants Audit Conference PowerPoint presentation | free to view - id: 1a2316-ZDc1Z



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Chartered Accountants Audit Conference

Description:

... at the assertion level to an acceptably low level with audit evidence obtained ... to reduce audit risk to an acceptably low level, determine overall responses to ... – PowerPoint PPT presentation

Number of Views:44
Avg rating:3.0/5.0
Slides: 38
Provided by: gigt
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Chartered Accountants Audit Conference


1
Chartered Accountants Audit Conference Application
of Complex Auditing Standards
Christin Schaller FCA Principal Red Square
Training and Consulting Pty Limited 02 9948 8686
charteredaccountants.com.au
2
Application of complex auditing standards
  • ASAs in force for financial periods commencing
    on/after 1 July 2006
  • Corporations Act audits/reviews standards
    legally enforceable via ASIC
  • all other audits/reviews standards enforced by
    professional bodies (eg via Institutes Quality
    Review program)

3
Application of complex auditing standards
  • ASAs reflect a business risk approach
  • understand environment and operations
  • assess risks arising
  • identify assertions at risk
  • design and perform procedures
  • evaluate evidence obtained

4
Application of complex auditing standards
  • Three key standards covered today
  • ASA 230 Audit Documentation
  • ASA 315 Understanding the Entity and its
    Environment and Assessing the Risks of Material
    Misstatement
  • ASA 330 The Auditors Procedures in Response to
    Assessed Risks

5
1. ASA 230 Audit documentation
  • purpose is to establish mandatory requirements
    and provide guidance on documentation
  • Key mandatory requirements
  • overall provide a basis for your audit report
    and evidence the audit was performed in
    accordance with ASAs

6
1. ASA 230 Audit documentation
  • documentation should enable an experienced
    auditor to understand the work performed
  • record the identifying characteristics of
    specific items/matters being tested
  • document discussions of significant matters
  • document contradictory information and how this
    was addressed

7
Heading Style
1. ASA 230 Audit documentation
Body copy gt Bullet style
  • where factors outside your control prevent you
    from complying with a mandatory requirement, need
    to document
  • - circumstances and reason
  • - alternative procedures

8
1. ASA 230 Audit documentation
  • record who performed work and date performed, and
    who reviewed the work and the date/extent of
    review
  • complete the audit file on a timely basis after
    the audit report

9
1. ASA 230 Audit documentation
  • once the file is completed, no documentation
    shall be deleted or discarded before the end of
    the retention period (7 years)
  • any modifications to the file need to be
    documented
  • need to adopt procedures for maintaining
    documentation (also a requirement of APES 320)

10
2. ASA 315 Understanding the entity/risks
  • purpose is to establish mandatory requirements
    and provide guidance on obtaining an
    understanding of the entity and its environment
    in assessing the risks of material misstatement
    in a financial report audit

11
2. ASA 315 Understanding the entity/risks
  • Deals with 5 key issues
  • risk assessment procedures, including internal
    controls
  • understanding the entity and its environment,
    including internal controls
  • assessing the risks of material misstatement
    (RMM), including identifying significant risks
  • communicating with management/those charged with
    governance
  • documentation

12
2. ASA 315 Understanding the entity/risks i. Risk
assessment procedures
Perform the following risk assessment procedures
to obtain an understanding of the entity, its
environment, and its controls a) inquiries of
management/staff b) analytical procedures c)
observation and inspection
13
2. ASA 315 Understanding the entity/risks i. Risk
assessment procedures
  • the members of the audit team should discuss the
    susceptibility of the entitys financial report
    to material misstatements.
  • the discussion needs to be documented, including
    any significant decisions reached.

14
2. ASA 315 Understanding the entity/risks ii. The
entity environment, including controls
  • You need to obtain an understanding of
  • relevant industry, regulatory, and other external
    factors including the applicable financial
    reporting framework, and
  • the nature of the entity
  • the entitys accounting policies and whether they
    are appropriate

15
2. ASA 315 Understanding the entity/risks ii. The
entity environment, including controls
  • obtain an understanding of the entitys
    objectives and strategies, and the related
    business risks that may result in material
    misstatements.

16
2. ASA 315 Understanding the entity/risks ii. The
entity environment, including controls
  • obtain an understanding of internal control
    relevant to the audit this comprises five
    elements
  • the control environment
  • the entitys risk assessment process
  • the information system
  • control activities
  • e) monitoring of controls

17
2. ASA 315 Understanding the entity/risks ii. The
entity environment, including controls
a) the control environment
18
2. ASA 315 Understanding the entity/risks ii. The
entity environment, including controls
b) the entitys process for identifying and
acting on business risks relevant to financial
reporting objectives
19
2. ASA 315 Understanding the entity/risks ii. The
entity environment, including controls
  • c) the information system relevant to financial
    reporting, including
  • the significant classes of transactions
  • the procedures by which those transactions are
    initiated, recorded, processed and reported
  • the related accounting records
  • how the system captures significant events
  • the financial reporting process

20
2. ASA 315 Understanding the entity/risks ii. The
entity environment, including controls
d) control activities, sufficient to assess the
RMM at the assertion level and to design further
audit procedures responsive to assessed risks
21
2. ASA 315 Understanding the entity/risks ii. The
entity environment, including controls
e) the major types of activities the entity uses
to monitor and correct controls
22
2. ASA 315 Understanding the entity/risks iii. As
sessing the risk of material misstatements (RMM)
  • using the information obtained thus far, identify
    and assess the RMM at the financial report level,
    and at the assertion level for classes of
    transactions, account balances and disclosures.

23
2. ASA 315 Understanding the entity/risks iii. As
sessing the risk of material misstatements (RMM)
  • as part of the risk assessment, determine which
    of the risks identified are risks that require
    special audit consideration (such risks are
    defined as significant risks)

24
2. ASA 315 Understanding the entity/risks iii. As
sessing the risk of material misstatements (RMM)
  • for significant risks, evaluate the design of the
    entitys related controls and determine whether
    they have been implemented.
  • to determine implementation, it is most likely
    you will need to test controls (select sample etc)

25
2. ASA 315 Understanding the entity/risks iii. As
sessing the risk of material misstatements (RMM)
  • as part of the risk assessment, evaluate the
    entitys controls over those risks for which it
    is not possible or practicable to reduce the
    risks of material misstatement at the assertion
    level to an acceptably low level with audit
    evidence obtained only from substantive
    procedures.

26
2. ASA 315 Understanding the entity/risks iv. Com
municating with management
  • make those charged with governance/management
    aware, as soon as practicable, of material
    weaknesses in internal control.

27
2. ASA 315 Understanding the entity/risks v. Docu
mentation
  • Matters to be documented include
  • discussions amongst the audit team
  • key elements of the understanding obtained of the
    entity, including each of the internal control
    components, and the risk of material
    misstatements
  • the assessed risk of material misstatement at the
    financial report and assertion level
  • risk areas where substantive procedures did not
    provide sufficient evidence, and the related
    controls evaluated

28
3. ASA 330 Procedures in response to risks
  • purpose is to establish mandatory requirements
    and provide guidance on determining overall
    responses and designing and performing further
    audit procedures to respond to the assessed RMM
    at the financial report and assertion levels

29
3. ASA 330 Procedures in response to risks
  • Deals with 4 key issues
  • introduction/ overall responses (to assessed
    risks)
  • audit procedures responsive to risks of material
    misstatement at the assertion level
  • evaluating the sufficiency and appropriateness of
    audit evidence obtained
  • documentation

30
3. ASA 330 Procedures in response to
risks i. Introduction/overall responses
  • in order to reduce audit risk to an acceptably
    low level, determine overall responses to
    assessed risks at the financial report level
  • i.e., choose your overall audit approach.

31
3. ASA 330 Procedures in response to
risks ii. Audit procedures responsive to risks
  • in determining the audit procedures, consider
    inherent and control risk, as this will affect
    the procedures selected.

32
3. ASA 330 Procedures in response to
risks ii. Audit procedures responsive to risks
  • when your assessment of risks of material
    misstatement at the assertion level includes an
    expectation that controls are operating
    effectively, you need to perform tests of control
  • also need to test controls related to significant
    audit risks

33
3. ASA 330 Procedures in response to
risks ii. Audit procedures responsive to risks
  • when you obtain audit evidence about the
    effectiveness of controls during an interim
    period, you should determine what additional
    evidence should be obtained for the remaining
    period.

34
3. ASA 330 Procedures in response to
risks ii. Audit procedures responsive to risks
  • irrespective of the assessed risk of material
    misstatement, you should design and perform
    substantive procedures for each material class of
    transactions, account balance and disclosure.

35
3. ASA 330 Procedures in response to
risks iii. Evaluating audit evidence
  • conclude whether sufficient appropriate audit
    evidence has been obtained to reduce to an
    acceptably low level the risk of material
    misstatement in the financial report.

36
3. ASA 330 Procedures in response to
risks iv. Documentation
  • document the overall responses to address the
    assessed risks, the further audit procedures, the
    link of those procedures with the assessed risks
    at the assertion level, and the results of audit
    procedures.

37
Heading Style
Application of complex auditing standards
Body copy gt Bullet style
  • In summary remember
  • standards now reflect a business risk approach
  • greater emphasis on understanding the entity and
    its environment
  • document what you do If its not documented
    its not done.
About PowerShow.com