Audit Steps

From Wikiversity
Jump to navigation Jump to search

Audits can vary from a very simple audit of the local church, to the audit of a multinational mining group. But all audits have the same basic steps being applied. Within each step the auditor uses his professional judgement, and considers the risk attached to the audit, to determine the level of work done in performing a step.

  1. Assess the appointment and terms of the engagement.
  2. Address independence and ethical issues.
  3. Understand the entity and its environment.
  4. Consider applicable laws and regulations.
  5. Consider fraud.
  6. Consider control systems, manual and IT.
  7. Assess materiality.
  8. Assess risk of material misstatement.
  9. Prepare audit plan and approach.
  10. Test internal controls if relying thereon.
  11. Perform substantive tests.
  12. Assess whether entity will continue as a going concern.
  13. Consider events occurring after financial year end.
  14. Obtain management representations.
  15. Verify correct disclosure of information in terms of relevant accounting framework.
  16. Evaluate evidence.
  17. Determine audit opinion and draft audit report.
  18. Obtain approval of financial information from management.
  19. Sign audit report.
  20. Report issues important to management separately.