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Development of Overall Audit Strategy

The document discusses the preliminary risk assessment phase (Phase I) of an audit. Phase I involves accepting and continuing audit clients, obtaining an understanding of the client and its environment, assessing risks, and developing an overall audit strategy. Key steps include: 1) obtaining consent to consult the predecessor auditor, 2) understanding the client and its internal controls, 3) consulting the predecessor auditor, 4) considering work of other parties, 5) determining materiality levels, 6) identifying risks of material misstatement, and 7) developing the overall audit strategy and detailed audit plan. The outcome of Phase I is assessed risks and the overall audit strategy.

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Phrexilyn Pajarillo
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204 views

Development of Overall Audit Strategy

The document discusses the preliminary risk assessment phase (Phase I) of an audit. Phase I involves accepting and continuing audit clients, obtaining an understanding of the client and its environment, assessing risks, and developing an overall audit strategy. Key steps include: 1) obtaining consent to consult the predecessor auditor, 2) understanding the client and its internal controls, 3) consulting the predecessor auditor, 4) considering work of other parties, 5) determining materiality levels, 6) identifying risks of material misstatement, and 7) developing the overall audit strategy and detailed audit plan. The outcome of Phase I is assessed risks and the overall audit strategy.

Uploaded by

Phrexilyn Pajarillo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Pr 102: ASSURANCE & AUDITING

CONCEPTS & APPLICATION

Chapters 03 & 04

OVERVIEW OF
PHASE I –
Preliminary Risk-
Assessment
Pr102: ASSURANCE &
AUDITING CONCEPTS &
APPLICATION
UNIT I: OVERVIEW OF AUDIT 9
High-Level Process
Client Auditor
Working Papers
Engagement Letter
PHASE I
Engagement Audit Strategy Accepting &
Letter Detailed Audit Continuing
Plan & Procedures Clients

Audit Audit Programs PHASE


Arrangement Time Budget
Letter Work Schedule Develop
Overall Audit
II
Assessed Risks Strategy

Management Develop
Representation Detailed Audit
Plan
Pr102: ASSURANCE &
AUDITING CONCEPTS &
APPLICATION
UNIT I: OVERVIEW OF AUDIT 10
High-Level Process – Developing an Overall Strategic Plan
AUDITOR
1 Obtain client’s consent
Create the
engagement team to make inquiries from
the predecessor
auditor (if any) 3
Obtain a deeper
2
understanding of the Obtain No
entity and its ed?
environment, Yes
including Internal
Consult with the 4
Control
predecessor auditor,
review his working
Yes
papers
New
client?
Consider work 5
No
performed by parties
other than the
predecessor auditor
Pr102: ASSURANCE &
AUDITING CONCEPTS &
APPLICATION
UNIT I: OVERVIEW OF AUDIT 11
High-Level Process – Developing an Overall Strategic Plan
AUDITOR
1 Obtain client’s consent 6 8
Create the Conduct consultation Identify risks of
engagement team to make inquiries from conference with material
the predecessor partners, managers misstatement (RMM)
auditor (if any) 3 and engagement team

Obtain a deeper
2
Obtain No 9
understanding of the 7
ed? Perform other risk Develop the Overall
entity and its
assessment Audit Strategy
environment, Yes
including Internal 4 procedures, including
Consult with the analytical procedures OAS
Control
predecessor auditor,
review his working Assessed
papers Risks
Yes
New Develop
client? Detailed Audit
Consider work 5 Determine
No Plan
performed by parties Materiality Levels
other than the
predecessor auditor

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