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Audit and Assurance - Coggle Diagram
Audit and Assurance
RISK
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Materiality
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Conditions
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Materiality should be reassessed during the audit in response to further information or risk arising
Each company must be considered with reference to its unique circumstances and the informational needs of the users of the financial statements
Sampling Risk
arises from the possibility that the auditor’s conclusion, based on a sample may be different from the conclusion reached if the entire population were subjected to the same audit procedure
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Risk Approach
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The auditor can, however, manipulate detection risk. If they assess that inherent and control risk are high (i.e. increased risk of material misstatement) they can lower detection risk through
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Ethics and Acceptance
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Code of Ethics
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only viable safeguard is not to accept an assurance engagement, or to resign from it
ACCA reserves the right to discipline members who infringe the rules through a process of disciplinary hearings.
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Fundementals Powes, Rights
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Audit Committees
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Function
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Making recommendations re appointment, removal and remuneration of the external auditor.
Reviewing and monitoring the external auditor’s independence and objectivity and the effectiveness of the audit process
Developing and implementing policy on the engagement of the external auditor to supply non-audit services.
Reviewing arrangements for confidential reporting by employees and investigation of possible improprieties – whistle blowing.
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Risk Management
Identify the risks faced (e.g. operational, financial, legal)
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Planning
Benefits of Planning
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The audit engagement is organised and managed in order to be performed in an efficient and effective manner
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Others
Farud and Error
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Reporting of fraud
• To management
• To those charged with governance if auditor suspects
management are involved in the fraud
• To third parties if there is a duty to report
• Modify the audit opinion if the fraud is material
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Corporate Governance
The Board
Responsibility
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Selecting, compensating, monitoring and, when necessary, replacing key executives
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Monitoring and managing potential conflicts of interest of management, board members and shareholders
Ensuring the integrity of the corporation’s accounting and financial reporting systems, overseeing the process of disclosure and communications.
“Board” primarily to mean the Supervisory board in a 2 tier board arrangement or the non-executive directors and relevant sub committees in a unitary board structure.
Action
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Composition, succession and evaluation
Audit, risk and
internal control
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