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An Introduction to Risk Based Auditing

An Introduction to Risk Based Auditing. Stuart Hartley FCA FocusROI Inc shartley@focusroi.com. The Audit Objective (ISA/CAS 200). To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement , whether due to fraud or error,

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An Introduction to Risk Based Auditing

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  1. An Introduction to Risk Based Auditing Stuart Hartley FCA FocusROI Inc shartley@focusroi.com

  2. The Audit Objective (ISA/CAS 200) • To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, thereby enabling • the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework;

  3. The Audit Process - in 3 steps • Risk assessment – What can go wrong? • Perform risk assessment procedures to identify and assess the risks of material misstatement in the financial statements. • Risk Response– Did it go wrong? • Perform further procedures to respond to the assessed risks and determine if material misstatements have occurred. • Reporting. – Opinion • What is the appropriate wording of the audit opinion based on the work performed?

  4. Basic Audit Requirements ISA/CAS 200 • Comply with relevant ethical requirements, • Plan and perform an audit with professional skepticism • Exercise professional judgment in planning and performing an audit • Obtain sufficient appropriate audit evidence to reduce audit riskto an acceptably low level • Comply with all CASs relevant to the audit

  5. An audit in 14 Steps

  6. Scope of Risk/Control Assessment

  7. Pervasive vs Transactional The foundation

  8. Scope of Risk/Control Assessment – Consider using the 3 risk/control Categories Entity Specific Pervasive Transactional C-PEM Form 520/522 C-PEM Form 530 C-PEM Form 540 - 560

  9. Identifying and Assessing Risk Document Results Assess RMM

  10. Pervasive Transactions Entity Specific Pervasive Transactional risks/controls (account balance) risks/controls Use of Professional Judgment to assess RMM Assertion F/S Level Level Categories of Risk and Control Risk Assessments

  11. Risk Response

  12. Reporting

  13. CPEM 2014 • A practical approach to auditing • The Canadian Professional Engagement Manual • Published by CPA Canada • http://www.castore.ca/product/canadian-professional-engagement-manual-members/5

  14. FocusROI Services • In house and web based Training • Quality Control Monitoring • Small group Coaching www.focusroi.com 416 594 0005 info@focusroi.com

  15. Please contact us for further informationinfo@focusROI.com416 594 0005

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