Risk Assessment for planning Flashcards
Risk assessment procedure to understanding of company.
Understanding of management, AP, observation and inspection, May, injuries external legal counsel, financial publications.
Observation and inspection provides support for inquiries and direct evidence about the entry and its environment.
observing actives and operations, inspecting docs and records, reading report (internal audit reports, interim stamen, quarterly reports, minutes of board meeting, tours of facilities , tracing financial transaction through the info system(walk-through)
ADA 5 basic steps
plan the ada-overall purpose and objectives (including methods, tools, graphic and tables to be used. 2 access and rare the data-format and filter the date , maintain data security and integrity. 3. consider the relevances and reliability of data used 4. perform the ADA-obtian output and judge whether items warrant further auditor consideration.
5. evaluate the results and conclude whether the purpose and specific objective have been achieved. (doc working paper.
5 source of info
1.Trend of sales (py to cy)
2.budgeted and actual(variance)
3.relation of sale and AR (sale up,
AR should be up)
4. comparable info from the client industry-inventory turnover ratio
5. relation ship between finical and relevant nonfincial info (labor cost and hours worked)
scanning
AP procedure using auditor judgment to identify significant or unusual items to test.
Inconsistent fluctuations or relationship or significant difference
inquiries of management 2. corroboration of responses with other audit evidence, 3 performance of any necessary other procedures. Moreover, the RMMs due to fraud should be considered
current ratio is less then 1
equal INCREASE in the numerator and denominator = INCREASE in ratio and equal DECREASE dec the ratio.
CURENT RATIO IS MORE THE 1
equal INCREASE in the numerator and denominator = Decrease in ratio and equal DECREASE and INCREASE the ratio.
