如何成为合格的审计咨询师08.ppt

Materiality and Risk,Chapter 8,Learning Objective 1,Apply the concept of materiality to the audit.,Materiality,The auditors responsibility is to determine whether financial statements are materially misstated.,If there is a material misstatement, the auditor will bring it to the clients attention so that a correction can be made.,Steps in Applying Materiality,Steps in Applying Materiality,Step 3,Estimate total misstatement in segment.,Learning Objective 2,Make a preliminary judgment about what amounts to consider material.,Set Preliminary Judgment,This preliminary judgment is the maximum amount by which the auditor believes the statements could be misstated and still not affect the decisions of reasonable users.,Ideally, auditors decide early in the audit the combined amount of misstatements of the financial statements that would be considered material.,Factors Affecting Judgment,Materiality is a relative rather than an absolute concept.,Bases are needed for evaluating materiality.,Qualitative factors also affect materiality.,Learning Objective 3,Allocate preliminary materiality to segments of the audit during planning.,Allocate Preliminary Judgment About Materiality to Segments,This is necessary because evidence is accumulated by segments rather than for the financial statements as a whole.,Most practitioners allocate materiality to balance sheet accounts.,SAS 39 (AU 350),Learning Objective 4,Use materiality to evaluate audit findings.,Estimated Total Misstatement Example,Net misstatement of the sample,$3,500 $50,000 $450,000 = $31,500,Example of Estimate for Sampling Error,Tolerable Direct Sampling Account Misstatement Projection Error Total Cash $ 4,000 $ 0 $ N/A $ 0 Accounts receivable 20,000 12,000 6,000* 18,000 Inventory 36,000 31,500 15,750* 47,250 Total estimated misstatement amount $43,500 $16,800 $60,300 Preliminary judgment about materiality $50,000 *estimate for sampling error is 50%,Learning Objective 5,Define risk in auditing.,Risk,Auditors accept some level of risk in performing the audit.,An effective auditor recognizes that risks exist, are difficult to measure, and require careful thought to respond.,Responding to risks properly is critical to achieving a high-quality audit.,Risk and Evidence,Auditors gain an understanding of the clients business and industry and assess client business risk.,Auditors use the audit risk model to further identify the potential for misstatements and where they are most likely to occur.,Example of Differing Evidence Among Cycles,Example of Differing Evidence Among Cycles,Inventory and Warehousing Cycle,Capital Acquisition and Repayment Cycle,Inherent risk,A,high,low,Learning Objective 6,Describe the audit risk model and its components.,Audit Risk Model for Planning,PDR = AAR (IR CR),Where,PDR = Planned detection risk,AAR = Acceptable audit risk,IR = Inherent risk,CR = Control risk,Learning Objective 7,Consider the impact of engagement risk on acceptable audit risk.,Impact of Engagement Risk on Acceptable Audit Risk,Auditors decide engagement risk and use that risk to modify acceptable audit risk.,Engagement risk closely relates to client business risk.,Factors Affecting Acceptable Audit Risk,The degree of which external users rely on the statements,The likelihood that a client will have financial difficulties after the audit report is issued,Factors Affecting Acceptable Audit Risk,The auditors evaluation of managements integrity,Making the Acceptable Audit Risk Decision,Making the Acceptable Audit Risk Decision,Methods to Assess Risk,Likelihood of financial difficulties,Analyze financial statements for difficulties using ratios. Examine inflows and outflows of cash flow statements.,Factors,Learning Objective 8,Consider the impact of several factors on the assessment of inherent risk.,Major Factors When Assessing Inherent Risk,Nature of the clients business Results of previous audits Initial versus repeat engagement Related parties Nonroutine transactions Judgment correctly record account balances and transactions Makeup of the population,Learning Objective 9,Consider information gathered to assess the likelihood of fraud.,Assessing Risks of Fraud,Three conditions are generally present.,1. Incentives/Pressures,2. Opportunities,3. Attitudes/Rationalization,Examples of Risks Factors for Fraudulent Reporting,1. Incentives/Pressures,Financial stability or profitability is threatened by economic, industry, or entity operating conditions.,Excessive pressure exists for management to meet debt requirements.,Personal net worth is materially threatened.,Examples of Risks Factors for Fraudulent Reporting,2. Opportunities,There are significant accounting estimates that are difficult to verify.,There is ineffective oversight over financial reporting.,High turnover or ineffective accounting internal audit, or information technology staff exists.,Examples of Risks Factors for Fraudulent Reporting,3. Attitudes/Rationalization,Inappropriate or inefficient communication and support of the entitys values is evident.,A history of violations of laws is known.,Management has a practice of making overly aggressive or unrealistic forecasts.,Responding to the Risk of Fraud,Design and perform audit procedures to address identified fraud risk.,Change the overall conduct of the audit to respond to identified fraud risk.,Perform procedures to address the risk of management override of controls.,Learning Objective 10,Discuss the relationship of risks to audit evidence.,Relationship of Risk Factors, Risk, and Evidence,Factors Influencing Risks,D = Direct relationship; I = Inverse relationship,Changing the Audit in Response to Risk,The engagement may require more experienced staff.,The engagement will be reviewed more carefully than usual.,Audit Risk for Segments,Both control risk and inherent risk are typically set for each cycle, each account, and often even each audit objective, not for the overall audit.,Relating Risk of Fraud to Risk Model Components,The risk of fraud can be assessed for the entire audit or by cycle, account, and objective.,Specific response could include revising assessments of acceptable audit risk, inherent risk, and control risk.,Tolerable Misstatement, Risks, and Balance-related Objectives,It is common to assess inherent and control risk for each balance-related audit objective.,It is not common to allocate materiality to objectives.,Measurement Limitations,One major limitation in the application of the audit risk model is the difficulty of measuring the components of the model.,Relationships of Risk to Evidence,Acceptable Planned Amount of Audit Inherent Control Detection Evidence Situation Risk Risk Risk Risk Required 1 High Low Low High Low 2 Low Low Low Medium Medium 3 Low High High Low High 4 Medium Medium Medium Medium Medium 5 High Low Medium Medium Medium,Tests of Details of Bala