COMPLETION OF AUDIT PLAN

							COMPLETION OF AUDIT PLAN
   Review of Hierarchy of Audit Tests

 Tests relating to assessing control risk –
  relate to “system” that produces FS
    o Procedures to obtain an
      understanding of internal control
         Inquiry, documentation,
           observation
         Ex. – trans walkthrough
    o Tests of controls
         Continuation/extension of above
         Relate primarily to transaction-
           related audit objectives

 Tests relating to setting detection risk-
  substantive tests - relate to “output” - FS
    o Analytical procedures
         See prior discussion (and Ch. 13)
    o Tests of details of balances
         Test the “details” of balances!

 Dual purpose tests
   o Tests of details of transactions
      Other Audit Testing Concepts

 Relationship between tests relating to CR
  and tests relating to DR
    o General rule – the lower the assessed
      level of control risk, the less
      substantive testing is needed
    o For significant accts, classes, or
      assertions, substantive testing is never
      eliminated entirely
    o Tests of controls (but not proc to
      obtain understanding) may be
      eliminated for two reasons…

 Cost concepts
   o Least to most costly (to auditor)…
   o A necessary test is never eliminated
     due to cost alone

 Timing of audit testing – general rules
    o Tests relating to control risk
    o Tests relating to detection risk
           The Audit Program

 Written for each audit area during
  planning
 Detailed list of audit procedures/tests
 Guides the systematic accumulation of
  evidence – insures all high risk assertions
  are addressed
 Requires initials/sign-off from auditor