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STEPS - Coggle Diagram
STEPS
Client Acceptance and Initial Planning
Engagement Letter
Auditor responsibilities
Client responsibilities
Expected fees
Timing
Need for any other services
Nature
Initial Audit Planning
Why the client wants or needs an audit
Terms of the engagement
New client or continue serving an existing one
Develops overall strategy
Understanding the Client’s Business and Accounting System
Understanding client's business and industry
Assessment of client business risk and acceptable risk
Inherent risks
Unique accounting requirements
extensive background research
Previous years' audit files
articles in trade magazines or financial press
Internet searches
Company's interim, internal and management's accounts
ISA 315
Risks of fraud and error
Risks through transactions with related parties
affect financial reporting
Risks with complex transactions
Gain an understanding
Degree of subjectivity
Knowledge of Business
Risks associated with unrecorded liabilities
Performing Preliminary Analytical Procedures
Purpose
Comparisons
Developing an Audit Planning
Description
nature, timing and extent of planned further audit
Other planned audit procedures
Nature, timing and extent of planned risk assessment
Tests
Risk assessment procedure
Test of controls
Substantive tests of transactions
Analytical procedures
Test of details of balances
Documentation
The audit plan
Any significant changes made
The overall audit strategy
Assessing Client’s Business Risk
Factors affecting the client and its environment
Rrisk of material misstatements
fail to achieve its objectives
SETTING MATERIALITY AND ASSESSING ACCEPTABLE RISKS
Sufficient information
Factors affecting key processes
Monitors key processes
Key processes
Operational and financial effects associated
Expectations
Developed independently
Documented
Communicated