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Part II Sec C2, 6) Engagement Conclusions, 7) Key Activities in…
Part II Sec C2
6) Engagement Conclusions
a) Providing Control
Assurance
Compliance
Mgt
-> maintain compliance requirement
-> implement policies
-> monitor compliance
IA
-> review obj and provide insight into the
consequence of non-compliance
-> inform mgt - indications of
sign non-compliance
Assess
adequacy and
effectiveness
of Control process:
sign discrepancies discovered
correction/ improvement after discovered
conclusion - pervasive
-> unacceptable lv of business risk?
CSA
“scoring” the control system
IA activity and bus unit collaborate
-> how well ctrl processes are working
-> sign of residual risk
emphasis accountability and responsibility
-> achieve org obj
b) Results
comm to client in audit report:
engagem obj, scope, results
results and its sign
take into a/c - expectation of all stakeholders
supported by suff, reliable, relevant, useful info
c) Observations
substructure of well-ordered facts, the findings, conclusions, opinions, and recommendations
-> reassure the client about what is (not)right, point and recommend solutions of identified problems
d) Findings (5Cs)
Criteria (correct state)
Conditions (current state)
Cause (reason for diff btw correct & current state)
Consequences (risk/ exposure - impact)
Corrective Actions (recommendations)
e) Conclusions
IA’s evaluations of the effects of
the observations (the facts)
recommendations on the
activities reviewed
-> perspective - overall implications
f) Opinions
Macro-level (overall) opinion
-> board lv for the org at a whole
-> CAE provide prof judgement
based on no. of ind engagement
within special time interval
Micro-level (engagement) opinion (must)
-> ind engagement
(within obj and scope)
Type of opinions:
Positive (reasonable) assurance
highest lv, strongest of audit opinion
by rating
Negative assurance
nothing come to IA's attention
Qualified opinion
exception of general opinion
CAE ensure opinion:
consistent with approved charter and suff audit evidence
intended audience & potential use of opinion
g) Recommendations
action that is most practical and economical
obj
mgt
open choices and how they measure up
best choice
mechanism to control the corrective action
h) A Tone of Fairness
both positive and negative conclusions
-> IA is objective and not biased
-> the client is much more likely to be receptive
7) Key Activities in Supervising Engagements
a) Fostering Cooperative Relationships
-> audit team and the ind - in (outside) of the org
b) Coordinating Work Assignments
auditor-in-charge should comm specific area assignments
and audit tests to audit team member (periodic)
-> ensure coverage and not duplicate
c) Creating Staff Schedules
build on 6 basic block of time
Initial planning
Creation or update of the audit program
Fieldwork
Internal audit supervisor or manager reviews
Report writing
Client review and discussions
-> The Gantt chart
d) Reviewing Workpapers
assuring engagement ->
carried out in acc with high quality std
evaluate each IA’s current skills
and future dvlm opp
e) Completing Performance
Appraisals of Engagement Staff
Performance appraisal
measures the degree to which an employee
accomplishes the work requirements
Gathering Evidence of Audit Performance Quality
Performance Review Scheduling
dual schedule - each audit, annual review by the CAE
Post-Audit Review
+ve : takes place immediately after the assignment
-ve: exhibit wide variability
Annual Review
Job competency
Interpersonal skills
Tools and techniques
IA standards, theory, and methodology
Knowledge areas
Face-to-Face Meeting
Schedule in advance
personalities and relationships
brief outlines
self-assessment
straightforward
summarize at the end
audit leader manages the audit team
and its work product and evaluates
staff perf on audit engagements