tailieunhanh - Lecture Auditing and assurance services in Australia (4th ed): Chapter 8 - Grant Gay, Roger Simnett

Chapter 8 - Understanding and assessing internal control. In this chapter we will discuss: explain the factors that influence the assessment of inherent risk; explain the auditor’s consideration of the special risk areas of fraud, related parties and the appropriateness of the going concern basis; and explain the concept of materiality. | Chapter 8 Understanding and assessing internal control 8- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 4e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett Learning objective 1: Audit strategy and internal control ‘Internal control’ is the process designed and implemented by those charged with governance, management and other personnel to provide reasonable assurance regarding the achievement of the entity’s objectives concerning financial reporting, the effectiveness and efficiency of operations, and compliance with laws and regulations. Refer ASA/ISA . 8- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 4e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett Audit strategy and internal control (cont.) As indicated in ASA/ISA , internal control is designed and implemented to address business risks that threaten any of these objectives: Reliability of the entity’s financial reporting Effectiveness and efficiency of the entity’s operations; and Compliance with applicable laws and regulations. The risk of material misstatement at the financial report level is affected by auditor’s understanding of the control environment (ASA/ISA ). 8- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 4e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett Auditor’s requirements ASA/ISA requires auditor to obtain an understanding of internal control relevant to the audit. Financial report level: auditor’s assessment of risk of material misstatement is affected by their understanding of the control environment (ISA/ISA ). Assertion level: Auditor needs to consider control risk in their assessment of risk of material misstatement (ASA/ISA ). 8- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance . | Chapter 8 Understanding and assessing internal control 8- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 4e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett Learning objective 1: Audit strategy and internal control ‘Internal control’ is the process designed and implemented by those charged with governance, management and other personnel to provide reasonable assurance regarding the achievement of the entity’s objectives concerning financial reporting, the effectiveness and efficiency of operations, and compliance with laws and regulations. Refer ASA/ISA . 8- Copyright 2010 McGraw-Hill Australia Pty Ltd PPTs t/a Auditing and Assurance Services in Australia 4e by Grant Gay and Roger Simnett Slides prepared by Roger Simnett Audit strategy and internal control (cont.) As indicated in ASA/ISA , internal control is designed and implemented to address business risks that threaten any of these

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• Assurance services profession
• Assurance services
• Auditing services
• Audit process
• Internal control structure
• Assessing control risk
• Structure of the profession
• Audit firms
• Assurance framework
• Accounting information
• Professional status
• Regulation of auditing
• The auditing profession
• Corporate governance
• Professional ethics
• Legal liability
• Liability to clients
• Financial repport audit process
• Financial report assertions
• The business
• Strategic business risk
• Inherent risk assessment
• Inherent risk
• Tests of controls
• Sales cycle
• Substantive tests
• Substantive tests of transactions
• Audit sampling
• Sampling theory
• Adjusting events
• Financial report
• Auditor’s reporting obligations
• Professional reporting obligations
• Prospective financial information
• Highlight information
• Institute of internal auditors
• Government accounting
• Reporting duties
• E commerce systems
• Business risk assessments