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Welcome To Audit - Coggle Diagram

- - - - If a company is a small standalone company
      - If company is a small par tof a small group
      - If the company obtains a guarantee from a UK parent company which prepares consolidated accounts or
      - If the company is dormant
  - - - We can't check everything and form expectations of financial information, furtherhmore auditor concerned with matieral aspects a company with multi million poudnd turnover is unlikely to review few hundred pound deal
    - - We're not meeant to detect fraud nwhilst we're in a good position to identify given proximity we don't chjeck every transaciton
      - If you suspect fraud give it to your in charge
    - - under UK GAAP acountds of comapnies prepared on basis company able to continue at least 12 months from the date
      - Auditor has a duty to asses appriopriateness of managment use og ongoing concern and figure oiut wheteher uncertaining in companbies abiluty to continue, however can make no guarantee whether they should conitnue
      - In preparing accounts should
        
        Ensure the accounts disclose the departure from ongoing concern basis
        
        Consider whether any enapairment slosses that need to be recognised
        
        Considered ewheterh contract shvae become onerous and if so recongise a provision
        
        Consider wheteher reclaissfications of liablities are required
- - - - What client does
      - How the client operates
      - Key Points of contact at the client
      - Key Risks the client is facing
      - Audit risks and judgemental areas
      - Timescales and deadlines
      - Allocation of work between members of the team
      - Challenges which arose in previous audits; and
      - Anythign else to watch out or be alert for!
      - If you're taking notes ensure you've noted down clients year end, which standards apply and the names of the key contacts
  - - - The list of documents audditor expects to need the clinet when they arrive on audit, part of the list will be stnadard items, others more specific
  - - - They are implying
        
        Buildings exist at year end
        
        Buildings owned or controlled by company at year end
        
        Buildings are valued according to the applicable accounting standard
        
        There are no other buildings owned or controlled by the company which are not included in this figure
  - - - Ensuring that transcations and events that are recorded have actually occured
    - - Is about ensuring that all transactions and events that should have been recorded have been recorded
    - - Accuracy about ensuring that amounts are recorded approopirately any related disclosures have measured and described
    - - Ensuring transactions reocreded in the correct period
    - - Ensuring they're recorded in the proper accounts
    - - Ensuring transactions are appropriately aggregated, clealry described and disclosures are relevant and understandable
  - - - Existence is ensuring that assets liablities and equity interests exist
    - - Ensuring that in the case of an assset the comopanty holds or controls the rights
    - - That all assets liablity and equity interests have been recorded and all relevant discloures made
    - - Ensuring assets included in financial statements at appropriate amunts
    - - ensuring assets liablities and equity interested arre relfected in rproper accounts
    - - Ensuring all of them are approipriately aggregated
- - - - Planning and risk assessment
        
        Audit Evidence- Controls Testing
        
        Audit Evidence- Substantive testing
        
        Completion; Reporting and review
  - - - Audit partner
        
        Most senuir meember if staff working on the audit and responsible for giving the audit ooinioin, invovled in key stages and review the riskiest areas
      - The Audit Manager
        
        The audit manager will undertake the majoirty of reviews of the work aof other members if the team, likely to lead key conversation, senior, flag partners any issues, key areas the partner look at during reviews
        
        The won't ususally be on site everyday but typically check-in foe porgress date
      - The in-charge
        
        In charge is the person who leads audit on day to day, most cases will be in their third year or be recently qualified
      - Aduti Seniors
        
        Undertake fieldwork and compile audit evidencen ffor the efile, take lead on key sections and responsible for supporting juniors
      - Audit Juniors
        
        ticking and bashing work which takes place on the auditn, not the most exciting, but vital improtance to the audit
  - - - Throughout the audit auditor will neeed to document the performed performed, Decisions and judgements made, documentation should be sufficent so that someone else with sinilar expertise
      - If it's not documented it didn't happen
      - However audit file should not contain copies invocies or iother document which reviewed aspart of audit, where document not need to be on the audit file it should not be included
      - All working will need to be revieed by a more seniuor memeeber of the team audit junior's work will usually be reviewed by in cahreg and then by the manager and partner
      - Working paper should contain a prepared by and reviewed by name and date so that it is clear who undertook the specific piece of work
  - - - Suffiency measure uquantitiy of audit evidence; higher the risk the more audit evvidence required
      - May Result in an increased range of procedures being performed and/or greater sample sizes being necessary
    - - Is a measure of the quality of audit evidence, it's relvance and reliablity, affected by source and nature of the audit evidene as well as the circumstances under which it is obtained
      - Third party audit evidence is likely to be more reliable and appropriate than relying ofn evidence generated by the company being audited whilst audit tests will begin by inquriing management inuqiry alone will not be approrpiate.
- - - - Self-Interest
        
        Audit firm of audit team has connection with audited entitiy or senior staff where firm reliant on fee generated. Because auditor lmay be tempted to issue clean auditr's report conduict the audit les robustly
      - Self review
        
        Threat arises, auditor reviewing their own work, it would be innaprooriate for a firm to suggest property values
      - Management
        
        Arises when audiro to involved with the decision making of audited entity
      - Advocacy
        
        Arises when auditor acts as an advocate for the audtied entity supporting position taken by management it would be innapropriate for a audit team
      - Familarity
        
        Threat is when audited too familar with audited entity or key memebers of nstaff at the audited entitty, long
      - Intimidation
        
        Arises wehen audtiro could be infliuneced by fear or threats form audited entittiy at the audited entitty
  - - - Auditor must ensure posses the necessary skills and expertise to accept appointment
      - Comply with ethical principles an auditor must ensuring that they posees necessary skills and expertise to accpe tappointment
      - Most auditors competent to undertake audit manufacturing or retail business, however may not posses sufficent experitse audit a bank for example
    - - Communicating with a predcessor auditor assists in indeying whether
        
        Position auditor vacant
        
        There are any professional reasons why the new auditor cannot take up appointment
        
        There are any other matters previous audior needs to bring up
    - - new auditor needs to gather information on the ownership structure, verifying indetity of benefical owners
      - Auditor need to complete anti-money laundering risk assesmsnet, auditor trying to estbalish intgreity of owners directors and mamnagment of the company
      - If auditor assess that these individuals lack integrity greater risk manipulating figures and gfreater fraud
    - - The auditor will need toasses results previous steps appointment processes to determine, overall, they are prepared the audit appointment
    - - If auditor accpet by appoimntment will issue engagment letter, needs to be signed the directors of audited entity will form the contract for the work setting out responsoblities