Chapter 3
Audit Process
[1] (RISKS, everything that might stand in the way of the goals to achieve a company’s goals).
Management Responsibilities: when you perform an audit is the financial statements
Auditor is interested in what management does. For errors in financial statements for decreases risk for auditor (Audit Risk)
*COSO Model is used mainly to identify the internal controls over (OPERATIONS)
Risk appetite of operations[a]:
-avoid ->
-accept -> Nothing will be done
-manage -> procedures in place to reduce risk (Implementing internal controls over financial reporting)
-share risks -> probably insure the risk (Fire insurance)
Internal control over financial reporting (ICOFR) -> COSO[b]
COSOMODEL
Control environments
Control activities
Monitor
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INTEGRATED AUDIT [c]-> an audit by the auditor public companies under supervision of PCAOB (US) (Beurs genoteerde companies)
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CHAPTER 3
Slide 1: [d]
Reasonable assurance -> auditor cannot give 100% assurance That everything in FS are right. Because the auditor is not present with every management and operational action.
This slide shows the responsibilities in its work
Slide 2:
Building blocks of an audit
FS MADE BY Management. Is a summary what MGT does with the company financially
Divide by 2 assertions[e] (See slide)
Slide 3
Transactions (assertions regarding profit and loss)
Accounts (Regarding Balance sheet)
Presentation and disclosure (Disclosure)
Slide 4
Integrated audit (Remember to review INTEGRATED AUDIT)
Management is responsible for everything. Auditor only needs to audit
Slide 5
- Just read. Not been able to pay attention
Slide 6
Audit FS and provide opinion of the FS
Detect errors and unintentional mistakes and fraudulence misstatements