Guide to Using International Standards on Auditing in - IFAC
Guide to Using International Standards on Auditing in - IFAC
Guide to Using International Standards on Auditing in - IFAC
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
18<br />
<str<strong>on</strong>g>Guide</str<strong>on</strong>g> <str<strong>on</strong>g>to</str<strong>on</strong>g> <str<strong>on</strong>g>Us<strong>in</strong>g</str<strong>on</strong>g> <str<strong>on</strong>g>Internati<strong>on</strong>al</str<strong>on</strong>g> <str<strong>on</strong>g>Standards</str<strong>on</strong>g> <strong>on</strong> <strong>Audit<strong>in</strong>g</strong> <strong>in</strong> the Audits of Small- and Medium-Sized Entities Volume 1—Core C<strong>on</strong>cepts<br />
2.2 The Audit Process<br />
The audit approach outl<strong>in</strong>ed <strong>in</strong> this <str<strong>on</strong>g>Guide</str<strong>on</strong>g> has been divided <strong>in</strong><str<strong>on</strong>g>to</str<strong>on</strong>g> three phases—risk assessment, risk resp<strong>on</strong>se,<br />
and report<strong>in</strong>g. The follow<strong>in</strong>g exhibit illustrates the nature of each phase and the <strong>in</strong>terrelati<strong>on</strong>ships between<br />
the activities and phases.<br />
Exhibit 2.2-1<br />
Activity Purpose Documentati<strong>on</strong> 1<br />
Perform prelim<strong>in</strong>ary<br />
engagement<br />
activities<br />
Decide whether <str<strong>on</strong>g>to</str<strong>on</strong>g><br />
accept engagement<br />
List<strong>in</strong>g of risk fac<str<strong>on</strong>g>to</str<strong>on</strong>g>rs<br />
Independence<br />
Engagement letter<br />
Risk Assessment<br />
Plan the audit<br />
Perform<br />
risk assessment<br />
procedures<br />
Develop an overall<br />
audit strategy and<br />
audit plan 2<br />
Identify/assess RMM 3<br />
through understand<strong>in</strong>g<br />
the entity<br />
Materiality<br />
Audit team discussi<strong>on</strong>s<br />
Overall audit strategy<br />
Bus<strong>in</strong>ess & fraud risks<br />
<strong>in</strong>clud<strong>in</strong>g significant risks<br />
Design/implementati<strong>on</strong> of<br />
relevant <strong>in</strong>ternal c<strong>on</strong>trols<br />
Assessed RMM 3 at:<br />
F/S level<br />
Asserti<strong>on</strong> level<br />
Risk Resp<strong>on</strong>se<br />
Design overall<br />
resp<strong>on</strong>ses and<br />
further audit<br />
procedures<br />
Implement resp<strong>on</strong>ses<br />
<str<strong>on</strong>g>to</str<strong>on</strong>g> assessed RMM 3<br />
Develop<br />
appropriate<br />
resp<strong>on</strong>ses <str<strong>on</strong>g>to</str<strong>on</strong>g><br />
the assessed RMM 3<br />
Reduce audit risk<br />
<str<strong>on</strong>g>to</str<strong>on</strong>g> an acceptably<br />
low level<br />
Update of overall strategy<br />
Overall resp<strong>on</strong>ses<br />
Audit plan that l<strong>in</strong>ks<br />
assessed RMM 3 <str<strong>on</strong>g>to</str<strong>on</strong>g> further<br />
audit procedures<br />
Work performed<br />
Audit f<strong>in</strong>d<strong>in</strong>gs<br />
Staff supervisi<strong>on</strong><br />
Work<strong>in</strong>g paper review<br />
Report<strong>in</strong>g<br />
yes<br />
Evaluate the audit<br />
evidence obta<strong>in</strong>ed<br />
Is<br />
additi<strong>on</strong>al<br />
work<br />
required?<br />
no<br />
Determ<strong>in</strong>e what<br />
additi<strong>on</strong>al audit work<br />
(if any) is required<br />
New/revised risk fac<str<strong>on</strong>g>to</str<strong>on</strong>g>rs<br />
and audit procedures<br />
Changes <strong>in</strong> materiality<br />
Communicati<strong>on</strong>s<br />
<strong>on</strong> audit f<strong>in</strong>d<strong>in</strong>gs<br />
C<strong>on</strong>clusi<strong>on</strong>s <strong>on</strong> audit<br />
procedures performed<br />
Prepare the<br />
audi<str<strong>on</strong>g>to</str<strong>on</strong>g>r’s report<br />
Form an op<strong>in</strong>i<strong>on</strong><br />
based <strong>on</strong> audit<br />
f<strong>in</strong>d<strong>in</strong>gs<br />
Significant decisi<strong>on</strong>s<br />
Signed audit op<strong>in</strong>i<strong>on</strong><br />
Notes:<br />
1. Refer <str<strong>on</strong>g>to</str<strong>on</strong>g> ISA 230 for a more complete list of documentati<strong>on</strong> required.<br />
2. Plann<strong>in</strong>g (ISA 300) is a c<strong>on</strong>t<strong>in</strong>ual and iterative process throughout the audit.<br />
3. RMM = Risks of material misstatement.
Change language