Financial Statement

Audit
Audit Process

Overview of the Audit Process

The audit financial statements starts with

the preparation of financial statements.

Overview of the Audit Process

The audit financial statements starts with

the preparation of financial statements.

A general approach to auditing requires

Overview of the Audit Process

The audit financial statements starts with

the preparation of financial statements.

A general approach to auditing requires

1. Financial statement assertions
2. Audit process
3. Audit evidence

Overview of the Audit Process

Financial statement audits has the objective

to increase the reliability of financial
statements.

Overview of the Audit Process

Major steps in audit engagement :

Overview of the Audit Process

1.

Major steps in audit engagement :

Accepting an Engagement

Overview of the Audit Process

1.
2.

Major steps in audit engagement :

Accepting an Engagement
Audit Planning

Overview of the Audit Process

1.
2.
3.

Major steps in audit engagement :

Accepting an Engagement
Audit Planning
Internal Control Evaluation

Overview of the Audit Process

1.
2.
3.
4.

Major steps in audit engagement :

Accepting an Engagement
Audit Planning
Internal Control Evaluation
Substantive Testing

Overview of the Audit Process

1.
2.
3.
4.
5.

Major steps in audit engagement :

Accepting an Engagement
Audit Planning
Internal Control Evaluation
Substantive Testing
Completing the Audit

Overview of the Audit Process

1.
2.
3.
4.
5.
6.

Major steps in audit engagement :

Accepting an Engagement
Audit Planning
Internal Control Evaluation
Substantive Testing
Completing the Audit
Issuance of audit report

Overview of the Audit Process

1.
2.
3.
4.
5.
6.

Major steps in audit engagement :

Accepting an Engagement
Audit Planning
Internal Control Evaluation
Substantive Testing
Completing the Audit
Issuance of audit report

Overview of the Audit Process

Accepting The Engagement

Overview of the Audit Process

Accepting The Engagement

Involves making decision in accepting or

rejecting an engagement.

Overview of the Audit Process

Accepting The Engagement

Involves making decision in accepting or

rejecting an engagement.

A practitioner accepts an assurance

engagement only where the practitioners
knowledge of the engagement
circumstances indicate that :

Overview of the Audit Process

1.
2.

A practitioner accepts an assurance

engagement only where the practitioners
knowledge of the engagement
circumstances indicate that :
Relevant ethical requirements
The engagement exhibits all the
characteristics:

Overview of the Audit Process

1.

The engagement exhibits all the

characteristics:

a)

The subject matter is appropriate;

Overview of the Audit Process

1.

The engagement exhibits all the

characteristics:

a)

The subject matter is appropriate;

The criteria to be used are suitable and
available;

b)

Overview of the Audit Process

1.

The engagement exhibits all the

characteristics:

a)

The subject matter is appropriate;

The criteria to be used are suitable and
available;
The practitioner has access to sufficient
evidence;

b)

c)

Overview of the Audit Process

1.

The engagement exhibits all the

characteristics:

a)

The subject matter is appropriate;

The criteria to be used are suitable and
available;
The practitioner has access to sufficient
evidence;
The practitioners conclusion must be written;

b)

c)

d)

Overview of the Audit Process

1.

The engagement exhibits all the

characteristics:

a)

The subject matter is appropriate;

The criteria to be used are suitable and
available;
The practitioner has access to sufficient
evidence;
The practitioners conclusion must be written;
The practitioner is satisfied that there is rational
purpose for the engagement.

b)

c)

d)
e)

Overview of the Audit Process

When a potential engagement cannot be

accepted as an assurance engagement because
it does not exhibit all the characteristics
presented, the engaging party must be able to
identify a different engagement that will meet
the needs of intended users.

Overview of the Audit Process

A.

Preconditions for an Audit

Overview of the Audit Process

A.
B.

Preconditions for an Audit

Agreement of the Responsibility of
management

Overview of the Audit Process

A.
B.

C.

Preconditions for an Audit

Agreement of the Responsibility of
management
Internal control

Overview of the Audit Process

A.
B.

C.
D.

Preconditions for an Audit

Agreement of the Responsibility of
management
Internal control
Limitation on scope prior to audit
engagement acceptance

Overview of the Audit Process

A.
B.

C.
D.

E.

Preconditions for an Audit

Agreement of the Responsibility of
management
Internal control
Limitation on scope prior to audit
engagement acceptance
Other factors affecting audit engagement
acceptance

Overview of the Audit Process

A.
B.

C.
D.

E.

F.

Preconditions for an Audit

Agreement of the Responsibility of
management
Internal control
Limitation on scope prior to audit
engagement acceptance
Other factors affecting audit engagement
acceptance
Form and Content of the Audit
engagement letter

Overview of the Audit Process

G.

Audit of components

Overview of the Audit Process

G.
H.

Audit of components
Responsibilities of management prescribed
by law or regulation

Overview of the Audit Process

G.
H.

I.

Audit of components
Responsibilities of management prescribed
by law or regulation
Recurring audits

Overview of the Audit Process

G.
H.

I.
J.

Audit of components
Responsibilities of management prescribed
by law or regulation
Recurring audits
Acceptance of a change in the terms of
the audit engagement

Overview of the Audit Process

G.
H.

I.
J.

K.

Audit of components
Responsibilities of management prescribed
by law or regulation
Recurring audits
Acceptance of a change in the terms of
the audit engagement
Request to change to a review or a related
service

Overview of the Audit Process

G.
H.

I.
J.

K.

L.

Audit of components
Responsibilities of management prescribed
by law or regulation
Recurring audits
Acceptance of a change in the terms of
the audit engagement
Request to change to a review or a related
service
Additional considerations in engagement
acceptance

Overview of the Audit Process

1.
2.
3.
4.
5.
6.

Major steps in audit engagement :

Accepting an Engagement
Audit Planning
Internal Control Evaluation
Substantive Testing
Completing the Audit
Issuance of audit report

Overview of the Audit Process

Audit Planning

Overview of the Audit Process

Audit Planning

Involves establishing the overall audit strategy

for the engagement and development of an
audit plan.

Adequate planning benefits the audit of financial

statements in several ways are:

Overview of the Audit Process

Audit Planning

Involves establishing the overall audit strategy

for the engagement and development of an
audit plan.

Adequate planning benefits the audit of financial

statements in several ways.

Planning includes the need to consider, prior to

the auditors identification and assessment of
risks.

Overview of the Audit Process

Audit Planning

Overview of the Audit Process

Audit Planning
A. Objective of planning

Overview of the Audit Process

Audit Planning
A. Objective of planning
B. Involvement of key engagement team members

Overview of the Audit Process

Audit Planning
A. Objective of planning
B. Involvement of key engagement team members
C. Planning Activities

Overview of the Audit Process

Audit Planning
A. Objective of planning
B. Involvement of key engagement team members
C. Planning Activities
1. Obtaining an understanding of the business its
environment

Overview of the Audit Process

Audit Planning
A. Objective of planning
B. Involvement of key engagement team members
C. Planning Activities
1. Obtaining an understanding of the business its
environment
2. Determining the need for expert

Overview of the Audit Process

Audit Planning
A. Objective of planning
B. Involvement of key engagement team members
C. Planning Activities
1. Obtaining an understanding of the business its
environment
2. Determining the need for expert
3. Establishing Materiality and Assessing Risk

Overview of the Audit Process

Audit Planning
A. Objective of planning
B. Involvement of key engagement team members
C. Planning Activities
1. Obtaining an understanding of the business its
environment
2. Determining the need for expert
3. Establishing Materiality and Assessing Risk

D. Documentation

Overview of the Audit Process

Audit Planning
A. Objective of planning
B. Involvement of key engagement team members
C. Planning Activities
1. Obtaining an understanding of the business its
environment
2. Determining the need for expert
3. Establishing Materiality and Assessing Risk

D. Documentation
E. Additional Considerations in initial audit
engagement