CPA Auditing and Attestation (AUD)

Certified Public Accountant Auditing and Attestation examination.

Audit FundamentalsAudit Planning and Risk AssessmentInternal Controls
Audit Evidence and SamplingProfessional Ethics and IndependenceAudit Reports and Opinions
Auditing in Small BusinessesTechnology in AuditingFraud Detection and Prevention
Effective Multiple-Choice StrategiesTime Management on Exam DayMastering Simulations
Audit FundamentalsAudit Planning and R...Internal ControlsAudit Evidence and S...Professional Ethics ...Audit Reports and Op...Auditing in Small Bu...Technology in Auditi...Fraud Detection and ...Effective Multiple-C...Time Management on E...Mastering Simulation...
Basic Concepts

Audit Planning and Risk Assessment

Setting the Stage for an Audit

Before diving into the numbers, auditors must plan the audit. Planning sets the direction, scope, and focus of the work.

Key Steps in Planning

  • Understanding the Business: Learn about the client’s industry, operations, and environment.
  • Setting Materiality: Decide what’s important enough to impact decisions.
  • Identifying Risks: Figure out where errors or fraud might occur.
  • Designing Procedures: Choose how to collect and evaluate evidence.

Risk Assessment

Auditors use risk assessment to prioritize areas that may have significant misstatements. This process involves:

  • Reviewing previous audits
  • Interviewing management
  • Analyzing industry trends

Real-World Importance

Good planning and risk assessment make audits efficient and effective, focusing attention where it matters most.

Examples

  • An auditor notices rapid inventory growth and plans extra checks for inventory valuation.

  • A company in a highly regulated industry triggers a focus on compliance risk.

In a Nutshell

Planning and risk assessment help auditors identify and focus on the most critical areas.

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Internal Controls