One point one Risks of material misstatement
The risks of material misstatement may exist at two levels: -
One point two Components of risk of material misstatement
One point two A Inherent risk
One point two B Control risk
One point four Audit risk-What is not included?
One point five Assessment of risks- A matter of professional Judgment
An Overview of Audit risk
One point five point one Combined Assessment of the Risk of Material Misstatement
RISK ASSESSMENT AND INTERNAL CONTROL
Test Your Understanding ONE
Test Your Understanding TWO
Test Your Understanding THREE
One point six Identifying and assessing the risk of material misstatement
RISK ASSESSMENT AND INTERNAL CONTROL
One point seven Risk Assessment Procedures
What is included in risk assessment procedures?
One point eight Information obtained by performing risk assessment procedures - Used as audit evidence
Test Your Understanding Four
Test Your Understanding Five
RISK ASSESSMENT AND INTERNAL CONTROL
Two point two. Materiality in Planning and performing an audit- Auditor's responsibility
Two point three Determination of materiality- a matter of professional judgment
Two point four Performance Materiality
Two point five Determining Materiality and Performance Materiality when Planning the Audit
Two point six Use of Benchmarks in Determining Materiality for the Financial Statements as a Whole
Risk Assessment and Internal Control
2.6.1 Chosen Benchmark - Relevant financial data
Two point six point two Determining a percentage to be applied to a chosen benchmark involves the exercise of professional judgment.
Two point seven Materiality Level or Levels for Particular Classes of Transactions, Account Balances or Disclosures
Two point eight Revision in Materiality level as the Audit Progresses
Two point nine Documenting the Materiality
Two point ten Materiality and Audit Risk
Test Your Understanding Six
Three. UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT
RISK ASSESSMENT AND INTERNAL CONTROL
Three point one. Why understanding the entity and its environment is significant?
Three point two. Understanding the entity-a continuous process
RISK ASSESSMENT AND INTERNAL CONTROL
Four point two. As derived from above definition, the purpose of Internal Control is as under
Four point three. Benefits of Understanding of Internal Control
Four point four. Limitations of Internal Control
RISK ASSESSMENT AND INTERNAL CONTROL
Four point five. Components of Internal Control
Four point five (A) Control Environment
What is included in Control Environment?
Elements of the Control Environment
RISK ASSESSMENT AND INTERNAL CONTROL
Four point five B The Entity's Risk Assessment Process
Four point five D Control Activities
Four point five E Monitoring of Controls
Test Your Understanding seven
Test Your Understanding eight
Four point six. Are all Controls Relevant to the audit?
Four point seven. Controls over the completeness and accuracy of information
Four point eight. Internal control over safeguarding of assets
Four point nine. Controls relating to objectives that are not relevant to an audit
Four point ten. Nature and Extent of the Understanding of Relevant Controls
Five. Risks That Require Special Audit
Five point one. Identifying Significant Risks
Five point two. Risks of Material Misstatement - Greater for Significant Non-Routine Transactions
Five point three. Risks of material misstatement- Greater for Significant Judgmental Matters
Six. Evaluation of System
Six point one. Benefits of Evaluation of Internal Control to the Auditor
Formulate Audit Program after understanding Internal Control
Six point two Evaluation of Internal Control- Methods
Six point two (A) The Narrative Record
RISK ASSESSMENT AND INTERNAL CONTROL
Six point two (B) Check List
Six point two (C) Internal Control Questionnaire
Few illustrative examples of Internal Control Questionnaire in different areas of an entity are given as under:
Six point two D. Flow Chart
Seven. Testing of Internal Control
Eight. WHAT IS AN AUTOMATED ENVIRONMENT?
Eight point one. Key features of an automated environment
Eight point two. Understanding environment
Eight point three. Risks arising from use of information technology Systems
Eight point four. Impact of information technology related risks
Eight point five. Types of Controls in an automated environment
Eight point five A. General information technology controls
Eight point five B Application Controls
Eight point five C I T dependent Controls
Eight point six General I T Controls versus Application Controls
Eight point seven Testing methods in an automated environment
Nine. Characteristics of Manual and Automated Elements of Internal Control Relevant to the Auditor's Risk Assessment
Nine point one Manual elements versus automated elements in entity's internal control
Ten. Audit Approach in an Automated Environment
Thirteen. Internal Financial Controls as Per Regulatory Requirements
Fourteen. Documenting the Risks
Fifteen. Assess and Report Audit Findings
Sixteen. The auditor's responses to assessed risks
Sixteen point one. Nature and extent of test of controls
Sixteen point two. Timing of test of controls
Sixteen point three. Using audit evidence obtained in previous audits
Risk assessment and internal control
Sixteen point four. Evaluating the operating effectiveness of controls
Sixteen point five. Specific inquiries by auditor when deviations from controls are detected
Sixteen point six Tests of Details
Sixteen point seven Substantive analytical procedures
Sixteen point seven point one Nature and extent of Substantive procedures
Test Your Understanding Nine
Test Your Understanding Ten
Answers to Questions involving Case Study One
RISK ASSESSMENT AND INTERNAL CONTROL
Answers to Questions involving case study two
RISK ASSESSMENT AND INTERNAL CONTROL
RISK ASSESSMENT AND INTERNAL CONTROL
Answers to Correct/Incorrect
Answers to Theoretical Questions
RISK ASSESSMENT AND INTERNAL CONTROL
Answers to Questions involving Test your Understanding
RISK ASSESSMENT AND INTERNAL CONTROL