Materiality

Can materiality be quantified? If so, how? What are the three steps in applying materiality to an audit? What factors should be considered when allocating materiality to an account balance?

Audit risk model

What are the components of the audit risk model? How does the audit risk model impact an audit plan?

Client Business Risk

What type of industry knowledge must an auditor possess to accurately assess a client’s business risk? What is a value chain analysis? How does this analysis apply to assessing a client’s business risk?

Why do certain accounts have to be audited 100 percent?

Why do certain accounts have to be audited 100 percent?

Audit risk

Is any component of audit risk within the control of the auditor? Explain.

Audit Assessment of Materiality)

4-58 (Audit Assessment of Materiality) The audit report provides reasonable assurance that the financial statements are free from material misstatements. The auditor is put in a difficult situation because materiality is defined from a user viewpoint, but the auditor must assess materiality in planning the audit to ensure that s ...continues

Classification

7-36 (Classification and Reliability of Audit Evidence) Following are examples of documentation typically obtained by auditors. Required For each example: a. Classify the documentation as internal or external evidence. b. Classify the documentation as to its relative reliability (high, moderate, or low). c. Identify an ...continues

Audit tests

What are the two types of audit tests? What are some examples of each of these two types of tests? How will the auditor use the data gathered from these tests?

Key elements

Why do auditors have to consider the internal controls of the organization? What are some key elements of internal control? Which are the most important? How will the auditor have to modify the audit program if the internal controls are deemed inadequate to support management assertions?

Mgmt assertions

What are management assertions? How do they affect the financial statements? How does the auditor formulate audit objectives based on management assertions?