Description

MODULE 1 -ASSURANCES SERVICES FRAMEWORK International Auditing and Ass Stds Board (IAASB) Structure of IAASB pronouncements Historical Financial Information - audits of Historial financial information - reviews of Assurance engagements other than audits or reviews of historial fin infor Related services Preamble to Australian auditing stds Assurance engagements - Types Assurance engagement - elements of three party rel'ship Direct reporting engagements Assertion based engagements Subject matter Suitable Criteria

Detail Description

Page No

Qs

Ruling

IAASB, IAASB(2009b)-Clarity Project suggestions, ISAs 1.5, 1.8 The new Structure includes Introduction, objective, definition, requirements and other explanatory materials. Figure 1.1 1.6 1.7 1.7 Prospective fin info, non-fin performance indicators, systems or processes and behaviour 1.7 eng'ts to perform agreed upon procedures, compiliations of fin infor, preparation of tax returns, consulting eng'ts 1.7 Q.4 1.8 Reasonable versus, Limited, differences 1.10 Q.3, Q.5 five - 3 party, app subject mtr, suitable crita, suff appr evidence, written ass rep practionioner, resp party and intended users 1.11 1.12 1.12 1.12 1.13 1.14

ISRE 2410, IFAE P11

Q.6

IFAE P25

five categories - Fin perfomance, Non-fin performance, Physical Characteristics, Systems and Processes and Behaviour relevance, completeness, reliability, neutrality, understandability Professional scepticism, sufficience and approp of evidence, materiality, ass eng'mt risk and nature, timing and extent of evidence gathering procedures qty of evidence and qlty evidence Materiality in context of quantitative and qualitative factors- relative magnitude, he nate and extent of the effecto of these factors inherent risk, control risk, detection risk

Sufficient appropriate evidence Professional scepticism Sufficiency and appropriateness of evidence Materiality Assurance engagement risk Inherent risk Control risk Detection risk Nature, timing and extent of evidence gathering procedures Assurance report Financial statements audit - using the assurance framework

1.16 1.16 1.17 1.17 1.18 1.18 1.18 1.18

Q.17

ISA 240 P12

two factors - reasonable ass will be less than obsolute ass, nature , timing and extend of evidence gathering in altd ass eng'ment 1.19 1.20 3 party rel'ship, subject matter, Criteria, Evidence collection, Written assurance report 1.21 Examples - understanding the entity and its enviro, assessing risk of material misstaement, internal controls consideration of fraud and error, audit evidence, analytical procedures, audit sampling and audit reporting 1.23 1.24 1.25 COSO - 1994 - objs: effectiveness and efficiency of operations, reliability of fin reporting, compliance, 5 components - control environment, risk assessment, control activities, infor and comm and monitoring 1.26 4 categories: strategic, operations, reporting and compliance. 8 components: internal environment, objective setting, event identification, risk assessment, risk response, control activities, infor and comm, monitoring 1.30

Q.10

Q.2

Audit judgement Establishing criteria Internal controls - assurance

Q.7

IFAE P37

Internal Control - integrated framework

Enterprise Risk Management - integrated framework

Q.8, Q.9

Code of Ethics for Professional Accts Code of Ethics for Professional Accts - the conceptual framework approach Threats Safeguards Professional conduce - fundamental principles Integrity Objectivity Professional competence and due care Confidentiality Professional behaviour Code of Ethics for professional accts in public practice Professional appointment Conflicts of interest Incompatible activities Conflicts between two or more clients Second opinions Fee and other types of remuneration Marketing professional services Gifts and hospitality Custody of client assets Objectivity - all services Independence Independence - a conceptual framework approach to Independence - an application of the conceptual framework approach to Quality Control Report - Auditor indepedence Quality controls for firms that perform audits and reviews Quality control - elements Leadership responsibilities for quality withing the firm - QC Ethical requirements - relevant - QC Acceptance and continuance of client rel'sp and specific eng'mts - QC Human resources - QC Engagement performance - QC

contents: Part A, Part B and Part C integrity, objectivity, prof competence and due care, confidentiality and prof behaviour self intt, self review, advocacy, faciliarity and intimidation - by profession, legislation or regulation. - by work environment integrity, objectivity, prof competence and due care, confidentiality and prof behaviour

1.32 1.34 1.34 1.35 1.36 1.36 1.36 1.36 1.37 1.37 1.37 1.37 1.38 1.38 1.39 1.39 1.39 1.40 1.40 1.40 1.40 1.40 1.41 1.42 1.43 1.44

Q.12 Q.14

Q.15

independence of mind, independence of appearance

Q.16

6 key elements: leadership resp, relevant ethical req, acceptance and continuance, human resources, engment perf, monitoring

1.45 1.46 1.46 1.47 1.48

eng'mt support materials, supervious and review process, consultation, eng'mt quality control review (EQCR) 1.48 risk reviews, compliance reviews, fin stmt desktop reiew, quality reviews - eng level, practice unit, global operation risk mgt review, global indpendence review

Monitoring - QC Public Sector perspective Public expenditure and financial control Auditor-General mandate

1.50 1.51 1.51 1.52

Q.11

ISQC 1

Australia, NSW (Financial audits, Compliance audits, Performance audits, Protected disclosures), VIC, HongKong,

MODULE 2 - GENERAL AUDIT PRINCIPLES AND AUDITOR RESPONSIBILITIES

Independent auditor - overall objectives of the independent audit and the conduct of an audit in accordance with ISA overall objectives, nature and scope, scope authority and structure. 2.5 Q.3, Q.1,Q.5 ISA 200 P 17, P32, OBJS - P45-47

Inherent risk Control risk Detection risk Audit risk

inherent risk factors control risk factors

2.7 2.7 2.8 2.7 2.10 2.10 2.14 2.14 2.14 2.16 2.17 2.18 2.19 2.19 2.19 2.21 2.22

Q.8,Q.11 Q.4 Q.6,Q.19 Q.2 Q.9, Q17 Q.10

Audit engagement - terms of change of terms of an engagement Engagement Letter Audit independence for the audit of fin'l stmts conflict of interst situation Non-audit services Independence test Audit independence and US legisation non-audit services, prohibits the employment in the capacity of. Quality control for audits Engagement team members compliance with enthical requirments Acceptance and continuance of client rel'sp and specific eng'mts Engagement teams - assignement of Engagement performance Results of the firms monitoring process Audit working papers - review Engagement partner Audit documentation Audit File Auditors reponsibility to consider fraud in an audit Fraud defined Fradulent financial reporting Management override Misappropriation of assets Professional scepticism - fraud Engagement team- discussions - fraud Risk assessment procedures Fraud risk factors - consideration of Fraud Triangle Incentives/pressures - fraud Opportunities - fraud Fraud - examples Risks of material mistatement due to fraud Risks of material mistatement due to fraud Audit evidence - evaluation - fraud Unable to continue engagement - fraud Documentation - fraud Communication of audit matters with those charged with governance Audit engagement team's independence Communicating deficiencies in internal control to those charged with governance and management eng'mt partner's direction, supervision and direction, Reviewers, Consultations detailed review - auditor in charge, higher level review - audit manager

ISA ISA ISA ISA 33

200 A 38, A39 200 P A34 - 41 200 P A42 210.10, - P 15, A32-

Q.20

ISA 220 P 19-21

review any queries, review working papers, review critical areas, following discussions 2.23 mandatory requirments, proof of evidence, significant matters 2.23 complete in 60 days, discard not before 7 yrs, exceptions - first, second 2.25 2.26 error - unintentional, fraud - intentional Examples. theft - examples 4 steps, factors, nature of fraud and fraud indicators incentive, opportunity, rationalise 4 categories. 4 corporate characteristics identificaton and assessment responses to fraud 2.26 2.27 2.27 2.27 2.28 2.29 2.30 2.30 2.31 2.31 2.31 2.35 2.37 2.37 2.38 2.38

Q.21

ISA 230 P 9 A12

Q.22,Q.2(M 7) ISA 240 P 11 A4-5, -A3

Q.13 Q.3 (M7) Q. 16

ISA 240 A4 ISA 240 P A15

Q.12 Q.4 (M7) Q.5 (M7) Q.7

ISA 240 P 11 A4-A5

ISA 240 P 26

fraud

2.39 2.39 2.40

Q.14

ISA 260 P A1-A4

fraud

MODULE 3 -UNDERSTANDING THE ENTITY, ASSESSING RISK AND RESPONDING TO RISKS

Audit Planning of financial statements nature and extent of plg, audit plg activities and procedures 3.5

Audit strategy Overall Audit Strategy Audit plan - dynamic document Audit Materiality

4 sections nature - direction and supervision, timing - when and extent how much of planned risk ass procedures

3.6 3.6 3.7 3.9

Q.8 Q.7, Q.10

ISA 300 APPX ISA 300 P 12 - P12

Materiality concepts Materiality concepts - application of Materiality - performance

>= 10% of base amt is material, <=5% of base amt is not material. Rules of thumb 510 % of profit, 0.5-1% of revenue and 0.5-1% of assets. 3.9 3.11 3.11 Classes of transactions : Occurance, Completeness, Accuracy, Cutoff & Classification, Account balances: Existence, Rights and obligations, Completeness, Valuations and allocations, Presentation and Disclosure: Occurance and rights and obligations, Completeness, Classification and understandability, Accuracy and Valuation

Assertions - Financial statement Identifying and assessing the risks of material mistatement through understanding the entity and its environment Risk assessment procedures - perform Entity and its environment - including internal control Internal controls Control environment Entity's risk assessment procsss Information system Control activities Monitoring of control Controls in an IT environment Controls - types of General controls Organisational and management controls Systems development and program maintenance controls Computer operation controls System software controls Data entry and program controls Other general IT controls Application controls

3.12

Q.11,Q.12, Q.13,Q.14, Q.15,Q.16

3.15 inquiries of mgt and others within the entity, analytical procedures, observations and inspection 5 components tone of organisations 3.15 3.17 3.18 3.19 3.19 3.20 Q.9, Q17 ISA 315 P6

authorisation, performance reviews, info processing, physical controls , segregation of duties 3.20 3.20 8 factors - inmpact of an IT environment on internal control and control procedures General controls, Application controls - Table 3.1 3.20 3.21 3.22 3.22 3.23 3.23 3.24 3.24 3.25 Q.17, Q.18

2 factors

Backup and recovery procedures, physical safeguards, contingency plans

Input controls

proper authorisation, accurate conversion, completeness of data( record counts, batch totals, hash totals, check digits), error correction and data resubmission 3.26 completeness and accuracy of data ( control totals, run to run controls, field size test, field sign test, trasaction codes, check digit test, valid character test, sequence test, validity test, cross footing test, zero balancing test, audit trail, completeness test, rounding test, per cent error test) maintaining accuracy during processing ( control totals, console messages, error log, limit test, reasonable test) Reasonableness of data ( limit test, range test, reasonableness test) updating correct files (internal labels, external labesl) 3.28 3.30

Processing controls Output controls

Risks of material mistatement - assess the significant risks - identify Strategic systems approach to auditing Strategic analysis Business risks Strategic risks Strategic analysis - techniques used

steps req to follow, examples client's systems dynamics Impacts of strategic analysis: expectations, going conern, audit risks, control environment

3.31 3.32 3.33 3.35 3.36 3.36 3.37

Q.1

ISA 315 P 28

Q.2

ISA 315 P 4 A30

Business models SWOT analysis PEST/PESTEL analysis Porters five forces

Business models, SWOT analysis, PEST/PESTEL analysis, Porter's five forces, Value chain analysis 8 components: External forces, markets/formats, stragetic mgt process, core busimess processes, resource mgt processes , alliances, core products and services and customers 4 factors: strengths, weaknesses, opportunities and threats 4/6 factors: Political, economic, soical, tecnological - environmental and legal 5 forces: Threat to new entrants, power of suppliers, intensity of industry rivalry, power of buyers and power of substitutes Primary activities (directly concerned with creation and deleivery of product/service) and Supportiv activities (improve the effectivenss and efficiency of primary activities) Evaluative techniques (use past information) and Predictive procedures (based on trends or relships) comparision to prior periods, bet'n locations, to budgets, to industry figures profitablity ratios, activity ratios, liquidity ratios, financing ratios key principles analytical procedures, tests of details misstatements results in : inaccuracies in data, omissions , incorrect accts estimates, judgement of mgt.

3.38 3.39 3.41 3.42

Q.5

TABLE 3.3

Value chain analysis Analytical procedures Simple comparisons Reasonableness tests Ratio analysis Responding to assessed risks Tests of control Substantive procedures Evaluation on misstatements identified during the audit

3.46 3.48 3.49 3.50 3.50 3.57 3.58 3.58 3.59

Q.6

MODULE 4 - THE AUDITOR'S RESPONSE TO ASSESSED RISKS

Sufficient appropriate audit evidence Audit evidence Financial stmt assertions Audit procedures key principles: sufficiency relates to qty of audit evidence, appropriateness relevance and reliability of audit evidence external evidence, internal evidence, audit evidence - original docs 4.5 4.6 Q.13(M1)

Tests of control Tests of control procedures Test data Integrated test facility (ITF)

classes of transactions and events, account balances, presentation and disclosure 4.6 1. tests of control and 2. substantive procedures:a. Tests of details, substantivie analytical procedures 4.7 2. objectives of tests of controls:to obtain evidence whether the controls operatede as documentss, to confirm whether the controls functioned effectively throught the period of reliance 4.8 4.9 test data approach, steps for running test data 4.10 ITF technique, main adjs and dis-adjs 4.12 Processing approaches: controlled processing, controlled re-processing, parallel processing - simulation, Non-Processing approaches: program code review(detailed review), Review of job accounting data (higher level review)

Q.8, Q9 Q.13

Testing controls - other tecnhiques, in IT systems

4.13

IT knowledge and exp available to the audit team, impracticality of manual tests of Computer assisted techniques for testing controls in IT systems control, efficiency and effectiveness, timing 100% examinations, selective examinations (high value, key items, items over certain Sampling techniques for testing controls amt), audit sampling Sample selection Random, systematic, haphazard Substantive audit procedures Nature of analytucal procedures, Factors effecting the use of analy. Procedures (availability of reliable data, level of aggregation of data), the use of analy. Analytical audit procedures Procedures as reasonableness tests Analytical procedures and other audit procedures realationship Tests of details nature of tests, tests of transactions and account balances Tests of account balances - types Audit software - using for substantitve testing Generalised audit software (GAS) Purpose written programs Utility programs and systems mgt programs Sampling techniques in substantive procedures Evidence gathering issues - advanced Accounting estimates - audit procedures for Related parties - audit procedures for Other auditors and experts - using the work of Component auditors Internal auditors Expert's auditors - auditor's experts E-commerce environment - evidence gathering in CAATS - use in an e-commerce environment Small businesses - audit of Small businesses - internal controls in Small business audits - audit approach Subsequent events Completion Management representation letters Solicitor's representation letters Checklist - audit completion external confirmations, bank confirmations, attendance at physical inventory counts GAS, PNP. UP functions of GAS Adjs and dis-adjs of utility and systems mgt prgs Dollar unit sampling, evaluation of substantive sample results audit procedures for assessing going concern issues factors to consider 3 standards esp work of other auditors (component auditors) who perfom work on related component for a group eg subsidiary considerations, evaluations tests of control in e-commerce environment, substantive testing in an e-commerce environemnt SMEs, small and medium sized enterprises

4.14 4.15 4.16 4.16

Q.5, Q4

ISA 530 APPX 4

1.17 1.19 4.21 4.22 4.25

Q.6

Q.3, Q.7 Q.1, Q.2, Q.12 Q.10, Q.11

ISA 505 P 15 A23

4.26 4.26 4.28 4.30 4.30 4.31 4.33 4.33 4.34 4.35 4.35 4.36 4.39 4.40 4.42 4.44 4.45 4.46 4.47 4.47

Q.14

Q.17

auditors responsibilites, applicable audit procedures, specific procedures,

Q.15 Q.16

MODULE 5 - REPORTING REQUIREMENTS

Reports associated witha reasonable assurance engagements Reporting responsibilities for audits of financial statements Reporting to shareholders Reporting to a regulatory body 5.6 5.6 5.6 5.7

reporting responsibilities ASIC board of directors, audit committee and other persons having responsibility of verseeing the starategic direction of an entity and mgt . Responsibility of audit is to report to those charged with governance and anot to mgt

Reporting to those charged with governance and management

5.8

Audit committee - communications with the Management letter Types of auditor's reports Unmodified auditors report Modifications to the auditors opinion Qualified opinion Adverse opinion Disclaimer of opinion Matters giving rise to a modified opinion and the type of modification Material misstatement Matters that do not affect the auditors opinion Emphsis of matter paragraph Other matters paragraph Materiality and Pervasiveness Pervasiveness Comparative information - audit implications of Auditors responsibilities relating to other information in documents containing audited financial stmts Fair presentative and compliance frameworks (true and fair overide) Specialised areas - audits of Special purpose frameworks - audits of fin stmts prepared in accordence Specific elements - audits of single financial stmts and specific elements, accounts or items of a fin stmt Summary financial statments Conscise financial reports - auditor's reports on Public sector - reports issued by the external auditor in the Auditors general's reports Parliament - report to Audit recommendations Limited assurance - reports providing - reviews Review of interim and other financial info performed by the auditor of the entity Reviews of finan infor where the assurance provider is not the auditor of the entity Reviews of other historical financial information Historical financial information - reviews Continuous disclosure No assurance - reports providing Compiliation reports Agreed upon procedures Agreed upon procedures - Reporting considerations

example qualified, an adverse and a disclaimer of popinion example example example TABLE 5.1 Emphasis of matter paragraph and other matters paragraph example

5.9 5.10 5.10 5.11 5.14 5.15 5.16 5.17 Q.1,Q.2, Q.8 Q.3,Q.4, Q.5 ISA 580 19-20

corresponding figures, comparative financial stmts. ISA 710.2

5.18 5.18 5.20 Q.6 5.20 5.21 5.21 5.21,5.1 4 5.23 5.25

acknowledge explicitly and implicitly about fair presentation special considerations, ISA 800, ISA 805, ISA 810 tax basis, cash receipts, finan rep provision, etc

5.26 5.27 5.27 5.28 5.29 5.29 5.30 5.31 5.31 5.31 5.32 5.33 5.33 5.34 5.34 5.34 5.35 5.35 5.36 5.36

Q.14

two stds: ISRE 2410, ISRE 2400 report on review of interim fin info

ref as unaudited, compiled without audit or review no opinion, no assurance

MODULE 6 - UNDERTAKING AN AUDIT OF A FINANCIAL STATEMENT

CS: the audit of eagle cliff ltd Client continuance: CS 6.4 6.9

CS 1: Reviewing client continuance and sending an engagement letter on a continuing engagement Ethical considerations: CS CS 2: Ehtical considerations Identifying and assessing the risks of material msistatement thru understanding the entity and its environment: CS risk associated with doing business in international mkts, type of ind, self dependencu, politicals risks, eco risks, competitive risks,oper risks and human resource risk

6.9 6.10 6.10 CODE OF ETH 290 230

6.10

ASA 315.A12 - 26

CS 3: Identifying and assessing the risks of material misstatement thru understanding the entity and its invironment CS 4: Preliminary analytical procedures and assessing the risks of material misstatement Assessing the risk of material misstatement in the sales, a/r, sales and a/r, internet booking sys, cash collection, recording of the cost of sales, cash receipts system: CS sales adj CS 5: Assessing the risk of material misstatement in the sales/a/r, cash receipt system CS 6: Response to assessed risks: Tests of control CS 7: Response to assessed risks: Substantive tests of accounts rec CS 8: Using audit software to analyse the a/r master file Completing the audit and audit reporting considerations : CS CS 9: Identification and resolution of audit differences CS 10: Audit reporting

6.11 6.13 6.15 6.18 6.18 6.19 6.19 6.20 6.20 6.21

MODULE 7 -THE AUDITOR'S RESPONSIBILITIES RELATING TO FRAUD IN AN AUDIT OF A FINANCIAL STATEMENT

Fraud Fraud survey Risk of fraud CS:1 Charged with governance and of mgt - responsibility of those Managements responsibility for fraud CS:2 Material misstatements due to fraud - auditors reponsibilties Professional scepticism CS:3 Engagement team communications Audit team communications and fraud CS: 4 Risk assessment procedures Fraud risk in an uncertain economic environment Charged with governence - Enquiries and obtaining an understanding of oversignt exercised by those Enquiries Management Risk assessment procedures and other infor CS:5 Fraud risk assessment program CS: 6 Risk assessment procedures and mgt oversignt CS: 7 Unusual and unexpected relationships - evaluations of Risk assessment thru analytical procedures CS: 8 Risk assessment procedures and fraud risk factors CS: 9 channel stuffing significant risks fraud triangle, ISA 240 Appendix 1 risk factors for fradulent fin reporting and misappropriation of assets material misstatement due to fraud incentive for fraud, opportunity for fraud, attitude for fraud 7.4 7.4 7.6 7.8

7.9 7.10 7.11 7.12 7.12 7.13 7.13 7.13 7.14 7.14 7.16 7.17 7.17 7.19

Q.1

Q.8

ISA 240 17

Identifying and assessing the risks of material msistatement due to fraud Identification and assessment of risk of material misstatement due to fraud CS: 10 Material misstatement due to fraud - response to assessed risks audit of accounting estimates fraud and audit procedures - circumstances that indicate the possibility of Fradulent financial reporting Misappropriation of assets Responde to assessed risk : reviewing the general journal CS: 11 Evidence gathering and impact of management override of controls CS: 12 Management representations Management representations CS: 13 Communications to mgt and with those charged with governance The auditors responsibility if fraud is detected CS:14 Continue the engagement - auditor unable to Communications to regulators and enforcement authories Continuing the audit CS: 15

related party transactions

7.19 7.20 7.21 7.21 7.22 7.22 7.22 7.23 7.24 7.25 7.25 7.26 7.26 7.26 7.27 7.27 Q.10 ISA 240 A64

MODULE 8 - THE AUDITOS'S RESPONSIBILITY TO CONSIDER THE GOING CONCERN ASSUMPTION IN THE AUDIT OF A FINANCIAL STATEMENT
Going concern assumption Going concern assumption - The auditors assessment Going concern - Responsibilities of management Going concern - Auditor's responsibilities Going concern - plg the audit and performing risk assessment procedeures Going concern - evaluating mgt's assessment of GCA Going concern - in uncertain or difficult economic environment Going concern - Period beyong mgt's assessment Extrapolating financial information Unusual and unexpected relationships - consideration Going concern - additional audit procedures when events or conditions are identified Mitigating circumstances Confirmation and evaluation of financial support Comfort letters Letter of support Letter of subordination Going concern assumption in a small business Going concern - audit conclusions and reporting Going concern assumption is appropriate Going concern assumption is non appropriate degree of uncertainity, size and complexity, subsequent events. ISA 570.A2 ISA 570.9 8.4 8.5 8.7 8.8 8.9 relevant periods: 12 mths fm the date of auditors current report to the expected date of the nedxt auditors report. 8.11 8.12 8.12 8.13 8.13 8.16 8.19 8.21 8.21 8.21 8.21 8.22 8.22 8.23 8.23 Q.4 Q.1, Q.2, Q.3

ISA 570 AUS 13.1 - A8 12 & A7

Going concern Going concern - audit software commonly used to evaluate GCA cash flow info, budgets, forcasts, debenture trust deeds, loan agreements Going concern, egs, potential mitigating factors Going concern Letters of support and letters of subordination provide fin assistance for fixed period of ususally 12 mths not to demand repayment of debts for a fixed period usually for 12 mths

Q.4, Q.5

opinions and egs opinions and egs

Q.8 Q.9, Q.10

ISA 570 18-19 ISA 570 17,18,19 - 22

Communications with those charged with governance Other reporting considerations Insolvent trading

Going concern Insolvent trading Going concern

8.24 8.25 8.25

MODULE 9 - PERFORMANCE ENGAGEMENTS

Performance engagements - Definition and scope Performance audit engagement Performance review engagement Economy Efficiency economy, efficiency and effectivements - mgt resources. ASAE 3500 9.7 reasonable assurance, reduce risk to acceptably low level, basis for positive form of expression of the assurance 9.8 limited assurance, reduce risk to a leve that is acceptable in the circumstances, basis for a negative form of expression of the assurance 9.8 9.9, lowest cost 9.20 9.9, maximise output for any given set of resource inputs, , Efficiency indicators, Egs. 9.20 9.10, achievement of objs or other intended effects of activities, ends orientated concept 9.21, rather than means orientated. Outcomes are the effectiveness of prgs. 9.33 9.10 9.10 planning - understand the org, prg or activity, conducting an audit - decide what to audit, forming opinions - decide how to audit and reporting - decide what and how to report 9.11 9.12 9.12 9.12 9.13 client - parliament, resp party - executive govt, assurance provider - auditor general. Egs of accountability 9.14 9.15 appointed by governor general on the recommendation of relevant minister for term of 10 yrs, can only be removed by governor general if both houses of the parliament make such a recommendation to GG 9.16 9.16 in consultation with the parliament - ANAO, egs of performance audits 9.17 Table 9.2 9.22 Table 9.2 9.22 Table 9.2 9.23 general criteria, specific criteria, established criteria, specifically developed criteria egs evidence, key issues, physical, testimonial, documentation and analytical cause - reason why something happened, effect - a conclusion may be quatifiable problems of assessing effectiveness professional judgement Figure 9.2 Performance audit Performance audit Performance audit - 4 methods data sources for effectiveness reviews, - citizen surveys, trained observer ratings, comparision of similar prgs, internal records, Egs 9.24 9.25 9.26 9.28 9.29 9.30 9.31 9.31 9.31 9.32 9.35 Q.1, Q.1O

Q.5

Effectiveness performance audit - key themes understanding performance audits

Performance audit from start to finish Materiality - performance audit Sufficiency - performance audit Documentation - performance audit Difference bet'n financial audit and performance audit Accountability and audits - performance audit Independence and quality control - performance audit

Q.15

Appoinment and removal of auditor general Policy issues - performance audit Performance audits - how are they selected Improved economy Improved efficiency Improved effectiveness Audit criteria - performance audit Criteria - egs - performance audit Audit considerations - performance audit Cause and effect Attribution - Performance audit Significance - Performance audit Economy, efficiency and effectiveness - techniques for examining Inputs/outputs review System based review Comparisions Effectivenss reviews

Q.9 Q.7, Q.14 Q.5 Q.8 Q.1 Q.3 Q.2

Management performance - performance audit Performance indicators Types of indicators - performance Inputs - Performance audit Outputs - performance audit Outcomes - performance audit Cost - effectiveness - ongoing monitoring Performance indicators - users of Performance indicators - attributes of meaningful PI Outcome indicators - effectiveness Service indicators - effectiveness Productivity indicators - efficiency Output indicators - activity level Cost - effectiveness indicators - effectiveness Performance audit process Project identification stage - Perform'ce audit process

considerations in assessing management performance relative: to targets/goals, to previous performance, to the performance of similar athorities. P I applied on: ongoing, periodic Inputs, outputs, outcomes, resources Egs. Egs. Egs. Performance audit parliament, public,media, client grps and research grps relevant, quantifiable, verifiable, free from bias, appropriate, fair presentation, balanced, cost effective egs egs egs egs egs 5 stages: Project identification stg, planning stg, audit conduct stg, reporting stg, follow up stg. Figure 9.4 1. select the org, prg or activity for audit, 2.Identify potential audit topics based on significance, risk to good mgt and potential benefits. 3. Gain an understanding of the org, prg or activity subject to audit, 4.Undertake preliminary study by identigying fundamental issues, 5. Prepare the preliminary study report, 6. Discuss the preliminary report, 7. Develop detailed audit criteria, 8. Develop audit plan including audit program 9. carry out audit procedures as defined in the audit prg, 10. analyse evidence and evaluate findings to develop conclusions and recommendations, 11. communicate summary of draft findings and proposed recommentations to the head of org and minister 12. report to the head of org, minster and parliament - assurance report content, assertion based rep and direct rep Performance audit Perfromance audit Follow up and report on conclusions and recommendations atleast once in 3 yrs, report to be transmitted to each house of parliament within 7 sitting days

9.37 9.39 9.40 9.41 9.41 9.41 9.42 9.42 9.42 9.43 9.43 9.43 9.43 9.43 9.44 9.45 Q.15

Q.4

Q.6

Planning stage - Perform'ce audit process. ASAE 3500.32

9.46

Q.12

Audit conduct stage - Perform'ce audit process Reporting stage - Perform'ce audit process Assertion based reporting Direct reporting Follow up stage - Perform'ce audit process Performance audit on the auditor general's office

9.47 9.49 9.51 9.51 9.52 9.52

MODULE 10 -OTHER ASSURANCE SERVICES AND INTERNAL AUDIT

Assurance Engagements - framework Assurance Engagements - nature Independence and Professional reputation Professional Judgement - Quality - expertise Survey of assurance services being provided 3 party rel'ship, subject matter, Criteria, Evidence collection, Written assurance report 10.5 10.5 10.6 10.7 10.7 Q.1 Q.2 Q.6 AUS 804 - P 10 The audit of prospective finan info AUS 804 P 9

Prospective financial information - assurance on Prospective financial information - guidance on ICEAW Non-Financial information - assurance on Environmental report Sustainability report Triple bottom line reporting - CPA Aus

Relevant, Understandable, Reliable, Comparable Environmental and Sustainability assurance

10.10 10.12 10.13 10.14 10.14 10.17

Q.10 Q.7

Inquiry, Observation, Inspection, Computation, Confirmation, Anal procedures

Q.8

Sustainability assurance - Frameworks for

10.18 ISAE 3000 - Ass Engmts other than audits or reviews of his fin info AA1000 - Assurance Std (AA1000AS)

Historical Financial Information Sustainability reporting - assurance on Sustainability assurance - recent surveys of Sustainability assurance - new developments Sustainability assurance

Eng acceptance, plg and per, imp or isae 3000, ontaining evidence, documentation, prepare ass rep Phase I, Phase II, insights and inadequacies Assurance on carbon emmission dis, ass on water accts reports subject matter, criteria, key per ind, evidence gathering, reporting on conculsion

10.19 10.20 10.22 10.23 10.25 10.28 10.29 10.31 10.32 10.32 10.33 Q.5 Q.3

Non-Financial information - Business Performance measurment Ass'g the reliability of infor and ass'g the relevance of perf meas relevant, avoids perverse incentives, attributable, well defined, timely, reliable, Performance measurement assurance - criteria comparable, verifiable Key Performance measures Internal control - assurance 1st, 2nd, 3rd and 4th phase Systems and Processes - assurance on COSO (1994) reporting to external parties Integrity and ethical values, Commitment to competence, board of directors or audit committee, mgr phil and op style, org structure, assign ment of auth and resp, human Control environment res Risk assessment Control activities Information and communication Monitoring COSO (1994) reporting guidelines Risk Management assurance Privacy assurance - Systems reliability 10 principles Behaviour - assurance on two forms Corporate governance assurance 8 principles Continuous auditing direct and indirect reporting customer focus, migration to higher val added infor, infor tech, pace of change and Core competencies for potential assurance services complexity, competition Internal audit - overview Key issues audit committee reporting Internal audit - engagement planning Internal audit - carrying out the engagement Internal audit - reporting

10.34 10.36 10.39 10.39 10.40 10.41 10.42 10.44 10.46 10.47 10.49 10.54 10.56 10.59 10.60 10.61 10.62

Q.4 Q.12 Q.6 Q.11

Q.13 Q.14 Q.15

Description
Acceptance and continuance of client rel'sp and specific eng'mts Acceptance and continuance of client rel'sp and specific eng'mts QC Accountability and audits - performance audit Accounting estimates - audit procedures for Adverse opinion Agreed upon procedures Agreed upon procedures - Reporting considerations

Description Detail

Page No
2.19 1.47

Qs

Ruling

client - parliament, resp party - executive govt, assurance provider - auditor general. Egs of accountability example no opinion, no assurance Nature of analytucal procedures, Factors effecting the use of analy. Procedures (availability of reliable data, level of aggregation of data), the use of analy. Procedures as reasonableness tests Evaluative techniques (use past information) and Predictive procedures (based on trends or relships)

9.14 4.30 5.16 5.36 5.36

Analytical audit procedures Analytical procedures Analytical procedures and other audit procedures - realationship Application controls

1.17 3.48 1.19

Q.6

Appoinment and removal of auditor general Assertion based engagements Assertion based reporting

appointed by governor general on the recommendation of relevant minister for term of 10 yrs, can only be removed by governor general if both houses of the parliament make such a recommendation to GG Performance audit Classes of transactions : Occurance, Completeness, Accuracy, Cutoff & Classification, Account balances: Existence, Rights and obligations, Completeness, Valuations and allocations, Presentation and Disclosure: Occurance and rights and obligations, Completeness, Classification and understandability, Accuracy and Valuation sales and a/r, internet booking sys, cash collection, recording of the cost of sales, sales adj

9.16 1.12 9.51

Assertions - Financial statement Assessing the risk of material misstatement in the sales, a/r, cash receipts system: CS Assessing the risk of material misstatement in the sales/a/r, cash receipt system - CS 5 Assurance engagement - elements of Assurance engagement risk

3.12 6.15 6.18

Q.11,Q.12, Q.13,Q.14, Q.15,Q.16

five - 3 party, app subject mtr, suitable crita, suff appr evidence, written ass rep inherent risk, control risk, detection risk

1.11 1.18 10.5 10.5 1.10 1.7 1.20 9.29 10.59 5.9 Q.1 Q.3, Q.5 ISRE 2410, IFAE P11

Assurance Engagements - framework 3 party rel'ship, subject matter, Criteria, Evidence collection, Written assurance report Assurance Engagements - nature Assurance engagements - Types Reasonable versus, Limited, differences Assurance engagements other than audits or reviews of historial fin infor Prospective fin info, non-fin per indi, systems or processes and behaviour Assurance report Attribution - Performance audit problems of assessing effectiveness audit committee reporting Audit committee - communications with the 9. carry out audit procedures as defined in the audit prg, 10. analyse evidence and evaluate findings to develop conclusions and recommendations, 11. communicate summary of draft findings and proposed recommentations to the head of org and Audit conduct stage - Perform'ce audit process minister Audit considerations - performance audit evidence, key issues, physical, testimonial, documentation and analytical

Q.14

9.47 9.26

Q.3

Audit criteria - performance audit Audit documentation Audit Audit Audit Audit Audit Audit Audit engagement - terms of engagement team's independence evidence evidence - evaluation - fraud File independence and US legisation independence for the audit of fin'l stmts

general criteria, specific criteria, established criteria, specifically developed criteria mandatory requirments, proof of evidence, significant matters change of terms of an engagement external evidence, internal evidence, audit evidence - original docs fraud complete in 60 days, discard not before 7 yrs, exceptions - first, second non-audit services, prohibits the employment in the capacity of. conflict of interst situation Examples - understanding the entity and its enviro, assessing risk of material misstaement, internal controls consideration of fraud and error, audit evidence, analytical procedures, audit sampling and audit reporting

9.24 2.23 2.10 2.39 4.6 2.38 2.25 2.16 2.14

Q.1 Q.21 Q.9, Q17 Q.13(M1)

ISA 230 P 9 A12 ISA 210.10, - P 15, A3233

Audit judgement Audit Materiality audit of accounting estimates Audit plan - dynamic document Audit Planning of financial statements Audit Audit Audit Audit Audit Audit Audit Audit procedures recommendations reporting - CS 10 risk software - using for substantitve testing strategy team communications and fraud CS: 4 working papers - review

1.23 3.9 7.21 3.7 3.5 4.7 5.31 6.21 2.7 4.25 3.6 7.12 2.22 1.52 5.31 2.26 5.25 10.46 Q.7, Q.10 ISA 300 P 12 - P12

nature - direction and supervision, timing - when and extent how much of planned risk ass procedures nature and extent of plg, audit plg activities and procedures 1. tests of control and 2. substantive procedures:a. Tests of details, substantivie analytical procedures

GAS, PNP. UP 4 sections detailed review - auditor in charge, higher level review - audit manager Australia, NSW (Financial audits, Compliance audits, Performance audits, Protected disclosures), VIC, HongKong,

Q.2 Q.1, Q.2, Q.12

ISA 200 P A42

Auditor-General mandate Auditors general's reports Auditors reponsibility to consider fraud in an audit Auditors responsibilities relating to other information in documents containing audited financial stmts Behaviour - assurance on

Business models Business risks CAATS - use in an e-commerce environment Cause and effect

two forms 8 components: External forces, markets/formats, stragetic mgt process, core busimess processes, resource mgt processes , alliances, core products and services and customers

Q.6

3.38 3.36 4.36 9.28 7.8 7.13 4.47 6.9 1.32 1.34 1.37

Q.2 Q.17 Q.2

ISA 315 P 4 A30

cause - reason why something happened, effect - a conclusion may be quatifiable

Charged with governance and of mgt - responsibility of those Charged with governence - Enquiries and obtaining an understanding of oversignt exercised by those Checklist - audit completion Client continuance: CS Code of Ethics for Professional Accts contents: Part A, Part B and Part C Code of Ethics for Professional Accts - the conceptual framework integrity, objectivity, prof competence and due care, confidentiality and prof approach behaviour Code of Ethics for professional accts in public practice

Comfort letters Communicating deficiencies in internal control to those charged with governance and management Communication of audit matters with those charged with governance Communications to regulators and enforcement authories Communications to mgt and with those charged with governance Communications with those charged with governance Comparative information - audit implications of Comparisions Compiliation reports Completing the audit and audit reporting considerations : CS Completion Component auditors Computer assisted techniques for testing controls in IT systems Computer operation controls Confidentiality Confirmation and evaluation of financial support Conflicts between two or more clients Conflicts of interest Conscise financial reports - auditor's reports on Continue the engagement - auditor unable to Continuing the audit CS: 15 Continuous auditing Continuous disclosure Control activities Control activities Control environment

Letters of support and letters of subordination fraud fraud

8.21 2.40 2.39 7.27 7.26 8.24 5.23 9.32 5.35 6.20 4.45 Q.14 Q.10 ISA 260 P A1-A4 ISA 240 A64

Going concern corresponding figures, comparative financial stmts. ISA 710.2 Performance audit - 4 methods ref as unaudited, compiled without audit or review

esp work of other auditors (component auditors) who perfom work on related component for a group eg subsidiary IT knowledge and exp available to the audit team, impracticality of manual tests of control, efficiency and effectiveness, timing

4.33 4.14 3.23 1.37 8.21 1.39 1.38 5.29 7.26 7.27 10.49 5.34

Going concern

direct and indirect reporting

Q.11

Control environment Control risk Control risk Controls - types of Controls in an IT environment Core competencies for potential assurance services Corporate governance assurance COSO (1994) reporting guidelines COSO (1994) reporting to external parties Cost - effectiveness - ongoing monitoring Cost - effectiveness indicators - effectiveness Criteria - egs - performance audit CS: the audit of eagle cliff ltd Custody of client assets Data entry and program controls

authorisation, performance reviews, info processing, physical controls , segregation of duties 3.20 10.39 tone of organisations 3.19 Integrity and ethical values, Commitment to competence, board of directors or audit committee, mgr phil and op style, org structure, assign ment of auth and resp, human res 10.34 1.18 control risk factors 2.7 General controls, Application controls - Table 3.1 3.21 8 factors - inmpact of an IT environment on internal control and control procedures customer focus, migration to higher val added infor, infor tech, pace of change and complexity, competition 8 principles 3.20 10.54 10.47 10.41 10.33 9.42 9.43 9.25 6.4 1.40 3.24

Q.4

ISA 200 A 38, A39

Q.4

Performance audit egs egs

Detection risk Detection risk Difference bet'n financial audit and performance audit Direct reporting Direct reporting engagements Disclaimer of opinion Documentation - fraud Documentation - performance audit E-commerce environment - evidence gathering in Economy

Perfromance audit

1.18 2.8 9.13 9.51 1.12 5.17 9.12

Q.6,Q.19

ISA 200 P A34 - 41

example

Q.1,Q.2, Q.8

ISA 580 19-20

tests of control in e-commerce environment, substantive testing in an e-commerce environemnt lowest cost

4.35 9.9, 9.20 9.31 9.10, 9.21, 9.33 9.35 9.9, 9.20 6.10 5.20 2.10

Economy, efficiency and effectiveness - techniques for examining Figure 9.2 achievement of objs or other intended effects of activities, ends orientated concept rather than means orientated. Outcomes are the effectiveness of prgs. data sources for effectiveness reviews, - citizen surveys, trained observer ratings, comparision of similar prgs, internal records, Egs maximise output for any given set of resource inputs, , Efficiency indicators, Egs.

Effectiveness Effectivenss reviews Efficiency Ehtical considerations - CS 2 Emphsis of matter paragraph Engagement Letter Engagement partner Engagement performance Engagement performance - QC Engagement team communications Engagement team- discussions - fraud Engagement team members compliance with enthical requirments Engagement teams - assignement of Enquiries Management

Q.5 CODE OF ETH 290 230 Q.10

example

review any queries, review working papers, review critical areas, following discussions 2.23 eng'mt partner's direction, supervision and direction, Reviewers, Consultations 2.19 eng'mt support materials, supervious and review process, consultation, eng'mt quality control review (EQCR) 1.48 significant risks 7.11 4 steps, 2.29 2.18 2.19 7.13 4 categories: strategic, operations, reporting and compliance. 8 components: internal environment, objective setting, event identification, risk assessment, risk response, control activities, infor and comm, monitoring 1.30 3.17 3.19 10.14 1.24 6.10 1.46 misstatements results in : inaccuracies in data, omissions , incorrect accts estimates, judgement of mgt. 3.59 7.24 4.30 Q.20 ISA 220 P 19-21

Q. 16

ISA 240 P A15

Q.8

ISA 240 17

Enterprise Risk Management - integrated framework Entity and its environment - including internal control Entity's risk assessment procsss Environmental report Establishing criteria Ethical considerations: CS Ethical requirements - relevant - QC Evaluation on misstatements identified during the audit Evidence gathering and impact of management override of controls CS: 12 Evidence gathering issues - advanced

Q.8, Q.9

audit procedures for assessing going concern issues

Expert's auditors - auditor's experts Extrapolating financial information Fair presentative and compliance frameworks (true and fair overide) Fee and other types of remuneration Financial statements audit - using the assurance framework Financial stmt assertions Follow up stage - Perform'ce audit process Fradulent financial reporting Fradulent financial reporting Fraud Fraud - examples fraud and audit procedures - circumstances that indicate the possibility of Fraud Fraud Fraud Fraud Fraud Fraud defined risk assessment program CS: 6 risk factors - consideration of risk in an uncertain economic environment survey Triangle

Going concern acknowledge explicitly and implicitly about fair presentation

4.35 8.13 5.26 1.39 Q.2

3 party rel'ship, subject matter, Criteria, Evidence collection, Written assurance report 1.21 classes of transactions and events, account balances, presentation and disclosure Follow up and report on conclusions and recommendations 4.6 9.52 2.27 7.22 7.4 2.35 7.22 error - unintentional, fraud - intentional factors, nature of fraud and fraud indicators material misstatement due to fraud incentive, opportunity, rationalise 2.26 7.14 2.30 7.13 7.4 2.31 3.22 functions of GAS 1.40 cash flow info, budgets, forcasts, debenture trust deeds, loan agreements ISA 570.9 relevant periods: 12 mths fm the date of auditors current report to the expected date of the nedxt auditors report. 8.16 8.22 8.8 8.11 8.12 8.12 8.9 degree of uncertainity, size and complexity, subsequent events. ISA 570.A2 8.7 8.4 8.5 8.22 8.23 8.23 1.7

incentive for fraud, opportunity for fraud, attitude for fraud

Q.5 (M7)

Q.22,Q.2(M 7) ISA 240 P 11 A4-5, -A3

Q.12 Q.17, Q.18 Q.10, Q.11

ISA 240 P 11 A4-A5

General controls Generalised audit software (GAS) Gifts and hospitality Going concern - additional audit procedures when events or conditions are identified Going concern - audit conclusions and reporting Going concern - Auditor's responsibilities Going concern - evaluating mgt's assessment of GCA Going concern - in uncertain or difficult economic environment Going concern - Period beyong mgt's assessment Going concern - plg the audit and performing risk assessment procedeures Going Going Going Going Going concern concern concern concern concern - Responsibilities of management assumption assumption - The auditors assessment assumption in a small business assumption is appropriate

Q.1, Q.2, Q.3

ISA 570 AUS 13.1 - A8 12 & A7

Q.4

opinions and egs opinions and egs

Q.8 Q.9, Q.10

ISA 570 18-19 ISA 570 17,18,19 - 22 ISAE 3000 - Ass Engmts other than audits or reviews of his fin info

Going concern assumption is non appropriate Historial financial information - reviews of

Historical Financial Information Historical Financial Information - audits of

Eng acceptance, plg and per, imp or isae 3000, ontaining evidence, documentation, prepare ass rep

10.19 1.7

Historical financial information - reviews Human resources - QC Identification and assessment of risk of material misstatement due to fraud CS: 10 Identification and resolution of audit differences - CS 9 Identifying and assessing the risks of material misstatement thru understanding the entity and its invironment - CS 3 Identifying and assessing the risks of material mistatement through understanding the entity and its environment Identifying and assessing the risks of material msistatement due to fraud related party transactions risk associated with doing business in international mkts, type of ind, self Identifying and assessing the risks of material msistatement thru dependencu, politicals risks, eco risks, competitive risks,oper risks and human understanding the entity and its environment: CS resource risk Improved economy Table 9.2 Improved effectiveness Table 9.2 Improved efficiency Table 9.2 Incentives/pressures - fraud 4 categories. Incompatible activities Independence Independence - a conceptual framework approach to independence of mind, independence of appearance Independence - an application of the conceptual framework approach to Independence and Professional reputation Independence and quality control - performance audit Independence test Independent auditor - overall objectives of the independent audit and the conduct of an audit in accordance with ISA Information and communication Information system Inherent risk Inherent risk

5.34 1.48 7.20 6.20

6.11

3.15 7.19

6.10 9.22 9.23 9.22 2.31 1.38 1.40 1.41 1.42 10.6 9.15 2.14

ASA 315.A12 - 26 Q.5 Q.8 Q.4 (M7)

Q.2

overall objectives, nature and scope, scope authority and structure.

inherent risk factors

2.5 10.39 3.20 1.18 2.7

Q.3, Q.1,Q.5

ISA 200 P 17, P32, OBJS - P45-47

Q.8,Q.11

Input controls Inputs - Performance audit Inputs/outputs review Insolvent trading Integrated test facility (ITF) Integrity Internal audit - carrying out the engagement Internal audit - engagement planning Internal audit - overview Internal audit - reporting Internal Auditing and Ass Stds Board (IAASB) Internal auditors Internal control - assurance

proper authorisation, accurate conversion, completeness of data( record counts, batch totals, hash totals, check digits), error correction and data resubmission 3.26 Egs. 9.41 Performance audit 9.31 Going concern 8.25 ITF technique, main adjs and dis-adjs 4.12 1.36 10.61 10.60 Key issues 10.56 10.62 ISSAB, ISSAB(2009b), ISAs considerations, evaluations 1st, 2nd, 3rd and 4th phase

Q.13 Q.15 Q.13

1.5, 1.8 4.34 10.32 Q.3

Internal Control - integrated framework Internal controls Internal controls - assurance Key Performance measures Leadership responsibilities for quality withing the firm - QC Letter of subordination Letter of support Limited assurance - reports providing - reviews Management letter Management override Management performance - performance audit Management representation letters Management representations Management representations CS: 13 Managements responsibility for fraud CS:2 Marketing professional services Material misstatement Material misstatement due to fraud - response to assessed risks Material misstatements due to fraud - auditors reponsibilties Materiality Materiality - performance Materiality - performance audit Materiality and Pervasiveness

COSO - 1994 - objs: effectiveness and efficiency of operations, reliability of fin reporting, compliance, 5 components - control environment, risk assessment, control activities, infor and comm and monitoring 5 components

1.26 3.18 1.25 10.31 1.46 8.21 8.21 5.32 5.10 2.27 9.37 4.46 7.25 7.25 1.40 5.18 7.21

Q.7

IFAE P37

not to demand repayment of debts for a fixed period usually for 12 mths provide fin assistance for fixed period of ususally 12 mths two stds: ISRE 2410, ISRE 2400 Examples. considerations in assessing management performance

Q.16

channel stuffing Materiality in context of quantitative and qualitative factors- relative magnitude, he nate and extent of the effecto of these factors

7.9 1.17 3.11 9.12 5.21

Q.1

Materiality concepts Materiality concepts - application of Matters giving rise to a modified opinion and the type of modification Matters that do not affect the auditors opinion Misappropriation of assets Misappropriation of assets Mitigating circumstances Modifications to the auditors opinion Monitoring

>= 10% of base amt is material, <=5% of base amt is not material. Rules of thumb 510 % of profit, 0.5-1% of revenue and 0.5-1% of assets. 3.9 3.11 TABLE 5.1 Emphasis of matter paragraph and other matters paragraph theft - examples Going concern, egs, potential mitigating factors qualified, an adverse and a disclaimer of popinion 5.18 5.20 2.27 7.22 8.19 5.14 10.40 Q.3,Q.4, Q.5 Q.6 Q.13

Monitoring - QC Monitoring of control Nature, timing and extent of evidence gathering procedures No assurance - reports providing Non-audit services Non-Financial information - assurance on Non-Financial information - Business Performance measurment Objectivity

risk reviews, compliance reviews, fin stmt desktop reiew, quality reviews - eng level, practice unit, global operation risk mgt review, global indpendence review

1.50 3.20

Q.11

ISQC 1

two factors - reasonable ass will be less than obsolute ass, nature , timing and extend of evidence gathering in altd ass eng'ment 1.19 5.35 2.14 Environmental and Sustainability assurance 10.13 Ass'g the reliability of infor and ass'g the relevance of perf meas 10.28 1.36

Q.10

Objectivity - all services Opportunities - fraud Organisational and management controls Other auditors and experts - using the work of Other general IT controls Other matters paragraph Other reporting considerations Outcome indicators - effectiveness Outcomes - performance audit Output controls Output indicators - activity level Outputs - performance audit Overall Audit Strategy Parliament - report to performance audit - key themes Performance audit engagement

4 corporate characteristics 2 factors 3 standards Backup and recovery procedures, physical safeguards, contingency plans Insolvent trading egs Egs. egs Egs.

1.40 2.31 3.22 4.33 3.25 5.21 8.25 9.43 9.41 3.30 9.43 9.41 3.6 5.31 9.10 9.8

Q.6

Q.8

ISA 300 APPX

Performance audit from start to finish Performance audit on the auditor general's office Performance audit process Performance audits - how are they selected Performance engagements - Definition and scope Performance indicators Performance indicators - attributes of meaningful PI Performance indicators - users of Performance measurement assurance - criteria Performance review engagement Pervasiveness PEST/PESTEL analysis

reasonable assurance, reduce risk to acceptably low level, basis for positive form of expression of the assurance planning - understand the org, prg or activity, conducting an audit - decide what to audit, forming opinions - decide how to audit and reporting - decide what and how to report atleast once in 3 yrs, report to be transmitted to each house of parliament within 7 sitting days 5 stages: Project identification stg, planning stg, audit conduct stg, reporting stg, follow up stg. Figure 9.4 in consultation with the parliament - ANAO, egs of performance audits economy, efficiency and effectivements - mgt resources. ASAE 3500 relative: to targets/goals, to previous performance, to the performance of similar athorities. P I applied on: ongoing, periodic relevant, quantifiable, verifiable, free from bias, appropriate, fair presentation, balanced, cost effective parliament, public,media, client grps and research grps relevant, avoids perverse incentives, attributable, well defined, timely, reliable, comparable, verifiable limited assurance, reduce risk to a leve that is acceptable in the circumstances, basis for a negative form of expression of the assurance

9.11 9.52 9.44 9.17 9.7 9.39 9.42 9.42 10.29 9.8 5.21,5.1 4 3.41

Q.15

Q.7, Q.14 Q.1, Q.1O

Q.5

4/6 factors: Political, economic, soical, tecnological - environmental and legal

Planning stage - Perform'ce audit process. ASAE 3500.32 Policy issues - performance audit Porters five forces Preamble to Australian auditing stds Preliminary analytical procedures and assessing the risks of material misstatement - CS 4 Privacy assurance - Systems reliability

3. Gain an understanding of the org, prg or activity subject to audit, 4.Undertake preliminary study by identigying fundamental issues, 5. Prepare the preliminary study report, 6. Discuss the preliminary report, 7. Develop detailed audit criteria, 8. Develop audit plan including audit program 9.46 9.16 5 forces: Threat to new entrants, power of suppliers, intensity of industry rivalry, power of buyers and power of substitutes 3.42 1.8 6.13 10.44

Q.12 Q.9

10 principles

Q.12

Processing controls Productivity indicators - efficiency Professional appointment Professional behaviour Professional competence and due care Professional Professional Professional Professional Professional conduce - fundamental principles Judgement - Quality - expertise scepticism scepticism - fraud scepticism CS:3

Project identification stage - Perform'ce audit process

completeness and accuracy of data ( control totals, run to run controls, field size test, field sign test, trasaction codes, check digit test, valid character test, sequence test, validity test, cross footing test, zero balancing test, audit trail, completeness test, rounding test, per cent error test) maintaining accuracy during processing ( control totals, console messages, error log, limit test, reasonable test) Reasonableness of data ( limit test, range test, reasonableness test) updating correct files (internal labels, external labesl) 3.28 egs 9.43 1.37 1.37 1.36 integrity, objectivity, prof competence and due care, confidentiality and prof behaviour 1.36 10.7 1.16 2.28 7.10 1. select the org, prg or activity for audit, 2.Identify potential audit topics based on significance, risk to good mgt and potential benefits. 9.45

Q.15 Q.14 Q.17 Q.3 (M7) ISA 240 P12 ISA 240 A4

Q.15 AUS 804 - P 10 The audit of prospective finan info AUS 804 P 9

Prospective financial information - assurance on Prospective financial information - guidance on ICEAW Public expenditure and financial control Public sector - reports issued by the external auditor in the Public Sector perspective Purpose written programs Qualified opinion Quality control - elements Quality control for audits Quality Control Report - Auditor indepedence Quality controls for firms that perform audits and reviews Ratio analysis Reasonableness tests Related parties - audit procedures for Related services Reporting responsibilities for audits of financial statements Reporting stage - Perform'ce audit process Reporting to a regulatory body Reporting to shareholders

Relevant, Understandable, Reliable, Comparable

10.10 10.12 1.51 5.30 1.51 4.26 5.15 1.45 2.17 1.43 1.44 3.50 3.50 4.31 1.7 5.6

Q.10 Q.7

example 6 key elements: leadership resp, relevant ethical req, acceptance and continuance, human resources, engment perf, monitoring

Q.16

profitablity ratios, activity ratios, liquidity ratios, financing ratios factors to consider eng'ts to perform agreed upon procedures, compiliations of fin infor, preparation of tax returns, consulting eng'ts

Q.4

12. report to the head of org, minster and parliament - assurance report content, assertion based rep and direct rep ASIC reporting responsibilities board of directors, audit committee and other persons having responsibility of verseeing the starategic direction of an entity and mgt . Responsibility of audit is to report to those charged with governance and anot to mgt

9.49 5.7 5.6

Reporting to those charged with governance and management Reports associated witha reasonable assurance engagements

5.8 5.6

Responde to assessed risk : reviewing the general journal CS: 11 Responding to assessed risks Response to assessed risks: Substantive tests of accounts rec CS 7 Response to assessed risks: Tests of control - CS 6 Results of the firms monitoring process Review of interim and other financial info performed by the auditor of the entity Reviewing client continuance and sending an engagement letter on a continuing engagement - CS 1 Reviews of finan infor where the assurance provider is not the auditor of the entity Reviews of other historical financial information Risk assessment Risk assessment procedures Risk assessment procedures Risk assessment procedures - perform Risk assessment procedures and fraud risk factors CS: 9 Risk assessment procedures and mgt oversignt CS: 7 Risk assessment procedures and other infor CS:5 Risk assessment thru analytical procedures CS: 8 Risk Management assurance Risk of fraud CS:1 Risks of material mistatement - assess the Risks of material mistatement due to fraud Risks of material mistatement due to fraud Safeguards Sample selection Sampling techniques for testing controls Sampling techniques in substantive procedures Second opinions Service indicators - effectiveness Significance - Performance audit significant risks - identify Simple comparisons Small business audits - audit approach Small businesses - audit of Small businesses - internal controls in Solicitor's representation letters Special purpose frameworks - audits of fin stmts prepared in accordence Specialised areas - audits of Specific elements - audits of single financial stmts and specific elements, accounts or items of a fin stmt Strategic analysis

key principles

7.23 3.57 6.19 6.18 2.21

report on review of interim fin info

5.33 6.9 5.33 5.34 10.36 2.30

fraud triangle, ISA 240 Appendix 1 risk factors for fradulent fin reporting and misappropriation of assets inquiries of mgt and others within the entity, analytical procedures, observations and inspection

7.12 3.15 7.19 7.16 7.14 7.17 10.42 7.6 3.31 2.37 2.37 1.35 4.16 Q.9, Q17 ISA 315 P6

steps req to follow, examples identificaton and assessment responses to - by profession, legislation or regulation. - by work environment Random, systematic, haphazard 100% examinations, selective examinations (high value, key items, items over certain amt), audit sampling 4.15 Dollar unit sampling, evaluation of substantive sample results 4.28 1.39 egs 9.43 professional judgement 9.30 3.32 comparision to prior periods, bet'n locations, to budgets, to industry figures SMEs, small and medium sized enterprises 3.49 4.42 4.39 4.40 4.47 5.27 5.27 5.28 Impacts of strategic analysis: expectations, going conern, audit risks, control environment 3.35

Q.7 Q.12 Q.5, Q4

ISA 240 P 26

ISA 530 APPX 4

Q.1

ISA 315 P 28

tax basis, cash receipts, finan rep provision, etc special considerations, ISA 800, ISA 805, ISA 810

Strategic analysis - techniques used Strategic risks Strategic systems approach to auditing Structure of IAASB pronouncements Subject matter Subsequent events Substantive audit procedures Substantive procedures Sufficiency - performance audit Sufficiency and appropriateness of evidence Sufficient appropriate audit evidence

Business models, SWOT analysis, PEST/PESTEL analysis, Porter's five forces, Value chain analysis client's systems dynamics Figure 1.1 five categories - Fin perfomance, Non-fin performance, Physical Characteristics, Systems and Processes and Behaviour auditors responsibilites, applicable audit procedures, specific procedures, analytical procedures, tests of details

3.37 3.36 3.33 1.6 1.13 4.44 4.16 3.58 9.12 1.17 4.5

Q.15

qty of evidence and qlty evidence key principles: sufficiency relates to qty of audit evidence, appropriateness relevance and reliability of audit evidence Professional scepticism, sufficience and approp of evidence, materiality, ass eng'mt risk and nature, timing and extent of evidence gathering procedures relevance, completeness, reliability, neutrality, understandability

Sufficient appropriate evidence Suitable Criteria Summary financial statments Survey of assurance services being provided Sustainability Sustainability Sustainability Sustainability Sustainability assurance assurance - Frameworks for assurance - new developments assurance - recent surveys of report

1.16 1.14 5.29 10.7 10.25 10.18 10.23 10.22 10.14 10.20 3.39 9.31 3.24 10.32 3.23 4.10

Q.14 Q.6

subject matter, criteria, key per ind, evidence gathering, reporting on conculsion Assurance on carbon emmission dis, ass on water accts reports insights and inadequacies

Sustainability reporting - assurance on SWOT analysis System based review System software controls Systems and Processes - assurance on Systems development and program maintenance controls Test data

Phase I, Phase II, 4 factors: strengths, weaknesses, opportunities and threats Performance audit

Q.5

AA1000 - Assurance Std (AA1000AS) TABLE 3.3

test data approach, steps for running test data Processing approaches: controlled processing, controlled re-processing, parallel processing - simulation, Non-Processing approaches: program code review(detailed review), Review of job accounting data (higher level review) external confirmations, bank confirmations, attendance at physical inventory counts

Q.8, Q9

Testing controls - other tecnhiques, in IT systems Tests of account balances - types Tests of control

4.13 4.22 3.58 Q.3, Q.7 ISA 505 P 15 A23

Tests of control Tests of control procedures Tests of details The auditors responsibility if fraud is detected CS:14 Threats three party rel'ship

2. objectives of tests of controls:to obtain evidence whether the controls operatede as documentss, to confirm whether the controls functioned effectively throught the period of reliance 4.8 4.9 nature of tests, tests of transactions and account balances 4.21 7.26 self intt, self review, advocacy, faciliarity and intimidation 1.34 practionioner, resp party and intended users 1.12

Q.6

IFAE P25

Triple bottom line reporting - CPA Aus Types of auditor's reports Types of indicators - performance Unable to continue engagement - fraud understanding performance audits Unmodified auditors report Unusual and unexpected relationships - consideration Unusual and unexpected relationships - evaluations of Using audit software to analyse the A/R master file CS 8 Utility programs and systems mgt programs

Inquiry, Observation, Inspection, Computation, Confirmation, Anal procedures Inputs, outputs, outcomes, resources

example Going concern - audit software commonly used to evaluate GCA

10.17 5.10 9.40 2.38 9.10 5.11 8.13 7.17 6.19 4.26

Q.8 Q.4

Q.4, Q.5

Adjs and dis-adjs of utility and systems mgt prgs Primary activities (directly concerned with creation and deleivery of product/service) and Supportiv activities (improve the effectivenss and efficiency of primary activities)

Q.14

Value chain analysis

3.46

Q.6

Description
MODULE 1 -ASSURANCES SERVICES FRAMEWORK

Detail Description

Page No

Qs

Ruling

Internal Auditing and Ass Stds Board (IAASB) ISSAB, ISSAB(2009b), ISAs Structure of IAASB pronouncements Figure 1.1 Historical Financial Information - audits of Historial financial information - reviews of Assurance engagements other than audits or reviews of historial fin infor Prospective fin info, non-fin per indi, systems or processes and behaviour eng'ts to perform agreed upon procedures, compiliations of fin infor, preparation of Related services tax returns, consulting eng'ts Preamble to Australian auditing stds Assurance engagements - Types Reasonable versus, Limited, differences Assurance engagement - elements of three party rel'ship Direct reporting engagements Assertion based engagements Subject matter Suitable Criteria five - 3 party, app subject mtr, suitable crita, suff appr evidence, written ass rep practionioner, resp party and intended users

1.5, 1.8 1.6 1.7 1.7 1.7 1.7 1.8 1.10 1.11 1.12 1.12 1.12 1.13 1.14 Q.4 Q.3, Q.5 ISRE 2410, IFAE P11

Q.6

IFAE P25

five categories - Fin perfomance, Non-fin performance, Physical Characteristics, Systems and Processes and Behaviour relevance, completeness, reliability, neutrality, understandability Professional scepticism, sufficience and approp of evidence, materiality, ass eng'mt risk and nature, timing and extent of evidence gathering procedures qty of evidence and qlty evidence Materiality in context of quantitative and qualitative factors- relative magnitude, he nate and extent of the effecto of these factors inherent risk, control risk, detection risk

Sufficient appropriate evidence Professional scepticism Sufficiency and appropriateness of evidence Materiality Assurance engagement risk Inherent risk Control risk Detection risk Nature, timing and extent of evidence gathering procedures Assurance report Financial statements audit - using the assurance framework

1.16 1.16 1.17 1.17 1.18 1.18 1.18 1.18

Q.17

ISA 240 P12

two factors - reasonable ass will be less than obsolute ass, nature , timing and extend of evidence gathering in altd ass eng'ment 1.19 1.20 3 party rel'ship, subject matter, Criteria, Evidence collection, Written assurance report 1.21 Examples - understanding the entity and its enviro, assessing risk of material misstaement, internal controls consideration of fraud and error, audit evidence, analytical procedures, audit sampling and audit reporting 1.23 1.24 1.25 COSO - 1994 - objs: effectiveness and efficiency of operations, reliability of fin reporting, compliance, 5 components - control environment, risk assessment, control activities, infor and comm and monitoring 1.26 4 categories: strategic, operations, reporting and compliance. 8 components: internal environment, objective setting, event identification, risk assessment, risk response, control activities, infor and comm, monitoring 1.30 contents: Part A, Part B and Part C 1.32

Q.10

Q.2

Audit judgement Establishing criteria Internal controls - assurance

Q.7

IFAE P37

Internal Control - integrated framework

Enterprise Risk Management - integrated framework Code of Ethics for Professional Accts

Q.8, Q.9

Code of Ethics for Professional Accts - the conceptual framework integrity, objectivity, prof competence and due care, confidentiality and prof approach behaviour Threats self intt, self review, advocacy, faciliarity and intimidation Safeguards - by profession, legislation or regulation. - by work environment integrity, objectivity, prof competence and due care, confidentiality and prof Professional conduce - fundamental principles behaviour Integrity Objectivity Professional competence and due care Confidentiality Professional behaviour Code of Ethics for professional accts in public practice Professional appointment Conflicts of interest Incompatible activities Conflicts between two or more clients Second opinions Fee and other types of remuneration Marketing professional services Gifts and hospitality Custody of client assets Objectivity - all services Independence Independence - a conceptual framework approach to independence of mind, independence of appearance Independence - an application of the conceptual framework approach to Quality Control Report - Auditor indepedence Quality controls for firms that perform audits and reviews Quality control - elements Leadership responsibilities for quality withing the firm - QC Ethical requirements - relevant - QC Acceptance and continuance of client rel'sp and specific eng'mts - QC Human resources - QC Engagement performance - QC 6 key elements: leadership resp, relevant ethical req, acceptance and continuance, human resources, engment perf, monitoring

1.34 1.34 1.35 1.36 1.36 1.36 1.36 1.37 1.37 1.37 1.37 1.38 1.38 1.39 1.39 1.39 1.40 1.40 1.40 1.40 1.40 1.41 1.42 1.43 1.44 1.45 1.46 1.46 1.47 1.48

Q.12 Q.14

Q.15

Q.16

eng'mt support materials, supervious and review process, consultation, eng'mt quality control review (EQCR) 1.48 risk reviews, compliance reviews, fin stmt desktop reiew, quality reviews - eng level, practice unit, global operation risk mgt review, global indpendence review

Monitoring - QC Public Sector perspective Public expenditure and financial control Auditor-General mandate

1.50 1.51 1.51 1.52

Q.11

ISQC 1

Australia, NSW (Financial audits, Compliance audits, Performance audits, Protected disclosures), VIC, HongKong,

MODULE 2 - GENERAL AUDIT PRINCIPLES AND AUDITOR RESPONSIBILITIES

Independent auditor - overall objectives of the independent audit and the conduct of an audit in accordance with ISA Inherent risk overall objectives, nature and scope, scope authority and structure. inherent risk factors 2.5 2.7 Q.3, Q.1,Q.5 Q.8,Q.11 ISA 200 P 17, P32, OBJS - P45-47

Control risk Detection risk Audit risk

control risk factors

2.7 2.8 2.7 2.10 2.10 2.14 2.14 2.14 2.16 2.17 2.18 2.19 2.19 2.19 2.21 2.22

Q.4 Q.6,Q.19 Q.2 Q.9, Q17 Q.10

Audit engagement - terms of change of terms of an engagement Engagement Letter Audit independence for the audit of fin'l stmts conflict of interst situation Non-audit services Independence test Audit independence and US legisation non-audit services, prohibits the employment in the capacity of. Quality control for audits Engagement team members compliance with enthical requirments Acceptance and continuance of client rel'sp and specific eng'mts Engagement teams - assignement of Engagement performance Results of the firms monitoring process Audit working papers - review Engagement partner Audit documentation Audit File Auditors reponsibility to consider fraud in an audit Fraud defined Fradulent financial reporting Management override Misappropriation of assets Professional scepticism - fraud Engagement team- discussions - fraud Risk assessment procedures Fraud risk factors - consideration of Fraud Triangle Incentives/pressures - fraud Opportunities - fraud Fraud - examples Risks of material mistatement due to fraud Risks of material mistatement due to fraud Audit evidence - evaluation - fraud Unable to continue engagement - fraud Documentation - fraud Communication of audit matters with those charged with governance Audit engagement team's independence Communicating deficiencies in internal control to those charged with governance and management eng'mt partner's direction, supervision and direction, Reviewers, Consultations detailed review - auditor in charge, higher level review - audit manager

ISA ISA ISA ISA 33

200 A 38, A39 200 P A34 - 41 200 P A42 210.10, - P 15, A32-

Q.20

ISA 220 P 19-21

review any queries, review working papers, review critical areas, following discussions 2.23 mandatory requirments, proof of evidence, significant matters 2.23 complete in 60 days, discard not before 7 yrs, exceptions - first, second 2.25 2.26 error - unintentional, fraud - intentional Examples. theft - examples 4 steps, factors, nature of fraud and fraud indicators incentive, opportunity, rationalise 4 categories. 4 corporate characteristics identificaton and assessment responses to fraud 2.26 2.27 2.27 2.27 2.28 2.29 2.30 2.30 2.31 2.31 2.31 2.35 2.37 2.37 2.38 2.38

Q.21

ISA 230 P 9 A12

Q.22,Q.2(M 7) ISA 240 P 11 A4-5, -A3

Q.13 Q.3 (M7) Q. 16

ISA 240 A4 ISA 240 P A15

Q.12 Q.4 (M7) Q.5 (M7) Q.7

ISA 240 P 11 A4-A5

ISA 240 P 26

fraud

2.39 2.39 2.40

Q.14

ISA 260 P A1-A4

fraud

MODULE 3 -UNDERSTANDING THE ENTITY, ASSESSING RISK AND RESPONDING TO RISKS

Audit Planning of financial statements Audit strategy nature and extent of plg, audit plg activities and procedures 4 sections 3.5 3.6

Overall Audit Strategy Audit plan - dynamic document Audit Materiality nature - direction and supervision, timing - when and extent how much of planned risk ass procedures

3.6 3.7 3.9

Q.8 Q.7, Q.10

ISA 300 APPX ISA 300 P 12 - P12

Materiality concepts Materiality concepts - application of Materiality - performance

>= 10% of base amt is material, <=5% of base amt is not material. Rules of thumb 510 % of profit, 0.5-1% of revenue and 0.5-1% of assets. 3.9 3.11 3.11 Classes of transactions : Occurance, Completeness, Accuracy, Cutoff & Classification, Account balances: Existence, Rights and obligations, Completeness, Valuations and allocations, Presentation and Disclosure: Occurance and rights and obligations, Completeness, Classification and understandability, Accuracy and Valuation

Assertions - Financial statement Identifying and assessing the risks of material mistatement through understanding the entity and its environment Risk assessment procedures - perform Business risks Entity and its environment - including internal control Internal controls Control environment Entity's risk assessment procsss Information system Control activities Monitoring of control Controls in an IT environment Controls - types of General controls Organisational and management controls Systems development and program maintenance controls Computer operation controls System software controls Data entry and program controls Other general IT controls Application controls

3.12

Q.11,Q.12, Q.13,Q.14, Q.15,Q.16

3.15 inquiries of mgt and others within the entity, analytical procedures, observations and inspection 3.15 3.17 3.17 3.18 3.19 3.19 3.20 Q.9, Q17 Q.2, Q.4 ISA 315 P6 ISA 315 A30 P4

5 components tone of organisations

authorisation, performance reviews, info processing, physical controls , segregation of duties 3.20 3.20 8 factors - inmpact of an IT environment on internal control and control procedures General controls, Application controls - Table 3.1 3.20 3.21 3.22 3.22 3.23 3.23 3.24 3.24 3.25 Q.17, Q.18

2 factors

Backup and recovery procedures, physical safeguards, contingency plans

Input controls

proper authorisation, accurate conversion, completeness of data( record counts, batch totals, hash totals, check digits), error correction and data resubmission 3.26 completeness and accuracy of data ( control totals, run to run controls, field size test, field sign test, trasaction codes, check digit test, valid character test, sequence test, validity test, cross footing test, zero balancing test, audit trail, completeness test, rounding test, per cent error test) maintaining accuracy during processing ( control totals, console messages, error log, limit test, reasonable test) Reasonableness of data ( limit test, range test, reasonableness test) updating correct files (internal labels, external labesl) 3.28 3.30

Processing controls Output controls

Risks of material mistatement - assess the significant risks - identify Strategic systems approach to auditing Strategic analysis Business risks Strategic risks Strategic analysis - techniques used

steps req to follow, examples client's systems dynamics Impacts of strategic analysis: expectations, going conern, audit risks, control environment

3.31 3.32 3.33 3.35 3.36 3.36 3.37

Q.1

ISA 315 P 28

Q.2

ISA 315 P 4 A30

Business models SWOT analysis PEST/PESTEL analysis Porters five forces

Business models, SWOT analysis, PEST/PESTEL analysis, Porter's five forces, Value chain analysis 8 components: External forces, markets/formats, stragetic mgt process, core busimess processes, resource mgt processes , alliances, core products and services and customers 4 factors: strengths, weaknesses, opportunities and threats 4/6 factors: Political, economic, soical, tecnological - environmental and legal 5 forces: Threat to new entrants, power of suppliers, intensity of industry rivalry, power of buyers and power of substitutes Primary activities (directly concerned with creation and deleivery of product/service) and Supportiv activities (improve the effectivenss and efficiency of primary activities) Evaluative techniques (use past information) and Predictive procedures (based on trends or relships) comparision to prior periods, bet'n locations, to budgets, to industry figures profitablity ratios, activity ratios, liquidity ratios, financing ratios key principles analytical procedures, tests of details misstatements results in : inaccuracies in data, omissions , incorrect accts estimates, judgement of mgt.

3.38 3.39 3.41 3.42

Q.5

TABLE 3.3

Value chain analysis Analytical procedures Simple comparisons Reasonableness tests Ratio analysis Responding to assessed risks Tests of control Substantive procedures Evaluation on misstatements identified during the audit

3.46 3.48 3.49 3.50 3.50 3.57 3.58 3.58 3.59

Q.6

MODULE 4 - THE AUDITOR'S RESPONSE TO ASSESSED RISKS

Sufficient appropriate audit evidence Audit evidence Financial stmt assertions Audit procedures key principles: sufficiency relates to qty of audit evidence, appropriateness relevance and reliability of audit evidence external evidence, internal evidence, audit evidence - original docs 4.5 4.6 Q.13(M1)

Tests of control Tests of control procedures Test data Integrated test facility (ITF)

classes of transactions and events, account balances, presentation and disclosure 4.6 1. tests of control and 2. substantive procedures:a. Tests of details, substantivie analytical procedures 4.7 2. objectives of tests of controls:to obtain evidence whether the controls operatede as documentss, to confirm whether the controls functioned effectively throught the period of reliance 4.8 4.9 test data approach, steps for running test data 4.10 ITF technique, main adjs and dis-adjs 4.12 Processing approaches: controlled processing, controlled re-processing, parallel processing - simulation, Non-Processing approaches: program code review(detailed review), Review of job accounting data (higher level review)

Q.8, Q9 Q.13

Testing controls - other tecnhiques, in IT systems

4.13

IT knowledge and exp available to the audit team, impracticality of manual tests of Computer assisted techniques for testing controls in IT systems control, efficiency and effectiveness, timing 100% examinations, selective examinations (high value, key items, items over certain Sampling techniques for testing controls amt), audit sampling Sample selection Random, systematic, haphazard Substantive audit procedures Nature of analytucal procedures, Factors effecting the use of analy. Procedures (availability of reliable data, level of aggregation of data), the use of analy. Analytical audit procedures Procedures as reasonableness tests Analytical procedures and other audit procedures - realationship Tests of details nature of tests, tests of transactions and account balances Tests of account balances - types Audit software - using for substantitve testing Generalised audit software (GAS) Purpose written programs Utility programs and systems mgt programs Sampling techniques in substantive procedures Evidence gathering issues - advanced Accounting estimates - audit procedures for Related parties - audit procedures for Other auditors and experts - using the work of Component auditors Internal auditors Expert's auditors - auditor's experts E-commerce environment - evidence gathering in CAATS - use in an e-commerce environment Small businesses - audit of Small businesses - internal controls in Small business audits - audit approach Subsequent events Completion Management representation letters Solicitor's representation letters Checklist - audit completion external confirmations, bank confirmations, attendance at physical inventory counts GAS, PNP. UP functions of GAS Adjs and dis-adjs of utility and systems mgt prgs Dollar unit sampling, evaluation of substantive sample results audit procedures for assessing going concern issues factors to consider 3 standards esp work of other auditors (component auditors) who perfom work on related component for a group eg subsidiary considerations, evaluations tests of control in e-commerce environment, substantive testing in an e-commerce environemnt SMEs, small and medium sized enterprises

4.14 4.15 4.16 4.16

Q.5, Q4

ISA 530 APPX 4

1.17 1.19 4.21 4.22 4.25

Q.6

Q.3, Q.7 Q.1, Q.2, Q.12 Q.10, Q.11

ISA 505 P 15 A23

4.26 4.26 4.28 4.30 4.30 4.31 4.33 4.33 4.34 4.35 4.35 4.36 4.39 4.40 4.42 4.44 4.45 4.46 4.47 4.47

Q.14

Q.17

auditors responsibilites, applicable audit procedures, specific procedures,

Q.15 Q.16

MODULE 5 - REPORTING REQUIREMENTS

Reports associated witha reasonable assurance engagements Reporting responsibilities for audits of financial statements Reporting to shareholders Reporting to a regulatory body 5.6 5.6 5.6 5.7

reporting responsibilities ASIC board of directors, audit committee and other persons having responsibility of verseeing the starategic direction of an entity and mgt . Responsibility of audit is to report to those charged with governance and anot to mgt

Reporting to those charged with governance and management

5.8

Audit committee - communications with the Management letter Types of auditor's reports Unmodified auditors report Modifications to the auditors opinion Qualified opinion Adverse opinion Disclaimer of opinion Matters giving rise to a modified opinion and the type of modification Material misstatement Matters that do not affect the auditors opinion Emphsis of matter paragraph Other matters paragraph Materiality and Pervasiveness Pervasiveness Comparative information - audit implications of Auditors responsibilities relating to other information in documents containing audited financial stmts Fair presentative and compliance frameworks (true and fair overide) Specialised areas - audits of Special purpose frameworks - audits of fin stmts prepared in accordence Specific elements - audits of single financial stmts and specific elements, accounts or items of a fin stmt Summary financial statments Conscise financial reports - auditor's reports on Public sector - reports issued by the external auditor in the Auditors general's reports Parliament - report to Audit recommendations Limited assurance - reports providing - reviews Review of interim and other financial info performed by the auditor of the entity Reviews of finan infor where the assurance provider is not the auditor of the entity Reviews of other historical financial information Historical financial information - reviews Continuous disclosure No assurance - reports providing Compiliation reports Agreed upon procedures Agreed upon procedures - Reporting considerations

example qualified, an adverse and a disclaimer of popinion example example example TABLE 5.1 Emphasis of matter paragraph and other matters paragraph example

5.9 5.10 5.10 5.11 5.14 5.15 5.16 5.17 Q.1,Q.2, Q.8 Q.3,Q.4, Q.5 ISA 580 19-20

corresponding figures, comparative financial stmts. ISA 710.2

5.18 5.18 5.20 Q.6 5.20 5.21 5.21 5.21,5.1 4 5.23 5.25

acknowledge explicitly and implicitly about fair presentation special considerations, ISA 800, ISA 805, ISA 810 tax basis, cash receipts, finan rep provision, etc

5.26 5.27 5.27 5.28 5.29 5.29 5.30 5.31 5.31 5.31 5.32 5.33 5.33 5.34 5.34 5.34 5.35 5.35 5.36 5.36

Q.14

two stds: ISRE 2410, ISRE 2400 report on review of interim fin info

ref as unaudited, compiled without audit or review no opinion, no assurance

MODULE 6 - UNDERTAKING AN AUDIT OF A FINANCIAL STATEMENT

CS: the audit of eagle cliff ltd Client continuance: CS 6.4 6.9

CS 1: Reviewing client continuance and sending an engagement letter on a continuing engagement Ethical considerations: CS CS 2: Ehtical considerations Identifying and assessing the risks of material msistatement thru understanding the entity and its environment: CS risk associated with doing business in international mkts, type of ind, self dependencu, politicals risks, eco risks, competitive risks,oper risks and human resource risk

6.9 6.10 6.10 CODE OF ETH 290 230

6.10

ASA 315.A12 - 26

CS 3: Identifying and assessing the risks of material misstatement thru understanding the entity and its invironment CS 4: Preliminary analytical procedures and assessing the risks of material misstatement Assessing the risk of material misstatement in the sales, a/r, sales and a/r, internet booking sys, cash collection, recording of the cost of sales, cash receipts system: CS sales adj CS 5: Assessing the risk of material misstatement in the sales/a/r, cash receipt system CS 6: Response to assessed risks: Tests of control CS 7: Response to assessed risks: Substantive tests of accounts rec CS 8: Using audit software to analyse the a/r master file Completing the audit and audit reporting considerations : CS CS 9: Identification and resolution of audit differences CS 10: Audit reporting

6.11 6.13 6.15 6.18 6.18 6.19 6.19 6.20 6.20 6.21

MODULE 7 -THE AUDITOR'S RESPONSIBILITIES RELATING TO FRAUD IN AN AUDIT OF A FINANCIAL STATEMENT

Fraud Fraud survey Risk of fraud CS:1 Charged with governance and of mgt - responsibility of those Managements responsibility for fraud CS:2 Material misstatements due to fraud - auditors reponsibilties Professional scepticism CS:3 Engagement team communications Audit team communications and fraud CS: 4 Risk assessment procedures Fraud risk in an uncertain economic environment Charged with governence - Enquiries and obtaining an understanding of oversignt exercised by those Enquiries Management Risk assessment procedures and other infor CS:5 Fraud risk assessment program CS: 6 Risk assessment procedures and mgt oversignt CS: 7 Unusual and unexpected relationships - evaluations of Risk assessment thru analytical procedures CS: 8 Risk assessment procedures and fraud risk factors CS: 9 channel stuffing significant risks fraud triangle, ISA 240 Appendix 1 risk factors for fradulent fin reporting and misappropriation of assets material misstatement due to fraud incentive for fraud, opportunity for fraud, attitude for fraud 7.4 7.4 7.6 7.8

7.9 7.10 7.11 7.12 7.12 7.13 7.13 7.13 7.14 7.14 7.16 7.17 7.17 7.19

Q.1

Q.8

ISA 240 17

Identifying and assessing the risks of material msistatement due to fraud Identification and assessment of risk of material misstatement due to fraud CS: 10 Material misstatement due to fraud - response to assessed risks audit of accounting estimates fraud and audit procedures - circumstances that indicate the possibility of Fradulent financial reporting Misappropriation of assets Responde to assessed risk : reviewing the general journal CS: 11 Evidence gathering and impact of management override of controls CS: 12 Management representations Management representations CS: 13 Communications to mgt and with those charged with governance The auditors responsibility if fraud is detected CS:14 Continue the engagement - auditor unable to Communications to regulators and enforcement authories Continuing the audit CS: 15

related party transactions

7.19 7.20 7.21 7.21 7.22 7.22 7.22 7.23 7.24 7.25 7.25 7.26 7.26 7.26 7.27 7.27 Q.10 ISA 240 A64

MODULE 8 - THE AUDITOS'S RESPONSIBILITY TO CONSIDER THE GOING CONCERN ASSUMPTION IN THE AUDIT OF A FINANCIAL STATEMENT
Going concern assumption Going concern assumption - The auditors assessment Going concern - Responsibilities of management Going concern - Auditor's responsibilities Going concern - plg the audit and performing risk assessment procedeures Going concern - evaluating mgt's assessment of GCA Going concern - in uncertain or difficult economic environment Going concern - Period beyong mgt's assessment Extrapolating financial information Unusual and unexpected relationships - consideration Going concern - additional audit procedures when events or conditions are identified Mitigating circumstances Confirmation and evaluation of financial support Comfort letters Letter of support Letter of subordination Going concern assumption in a small business Going concern - audit conclusions and reporting Going concern assumption is appropriate Going concern assumption is non appropriate degree of uncertainity, size and complexity, subsequent events. ISA 570.A2 ISA 570.9 8.4 8.5 8.7 8.8 8.9 relevant periods: 12 mths fm the date of auditors current report to the expected date of the nedxt auditors report. 8.11 8.12 8.12 8.13 8.13 8.16 8.19 8.21 8.21 8.21 8.21 8.22 8.22 8.23 8.23 Q.4 Q.1, Q.2, Q.3

ISA 570 AUS 13.1 - A8 12 & A7

Going concern Going concern - audit software commonly used to evaluate GCA cash flow info, budgets, forcasts, debenture trust deeds, loan agreements Going concern, egs, potential mitigating factors Going concern Letters of support and letters of subordination provide fin assistance for fixed period of ususally 12 mths not to demand repayment of debts for a fixed period usually for 12 mths

Q.4, Q.5

opinions and egs opinions and egs

Q.8 Q.9, Q.10

ISA 570 18-19 ISA 570 17,18,19 - 22

Communications with those charged with governance Other reporting considerations Insolvent trading

Going concern Insolvent trading Going concern

8.24 8.25 8.25

MODULE 9 - PERFORMANCE ENGAGEMENTS

Performance engagements - Definition and scope Performance audit engagement Performance review engagement Economy Efficiency economy, efficiency and effectivements - mgt resources. ASAE 3500 9.7 reasonable assurance, reduce risk to acceptably low level, basis for positive form of expression of the assurance 9.8 limited assurance, reduce risk to a leve that is acceptable in the circumstances, basis for a negative form of expression of the assurance 9.8 9.9, lowest cost 9.20 9.9, maximise output for any given set of resource inputs, , Efficiency indicators, Egs. 9.20 9.10, achievement of objs or other intended effects of activities, ends orientated concept 9.21, rather than means orientated. Outcomes are the effectiveness of prgs. 9.33 9.10 9.10 planning - understand the org, prg or activity, conducting an audit - decide what to audit, forming opinions - decide how to audit and reporting - decide what and how to report 9.11 9.12 9.12 9.12 9.13 client - parliament, resp party - executive govt, assurance provider - auditor general. Egs of accountability 9.14 9.15 appointed by governor general on the recommendation of relevant minister for term of 10 yrs, can only be removed by governor general if both houses of the parliament make such a recommendation to GG 9.16 9.16 in consultation with the parliament - ANAO, egs of performance audits 9.17 Table 9.2 9.22 Table 9.2 9.22 Table 9.2 9.23 general criteria, specific criteria, established criteria, specifically developed criteria egs evidence, key issues, physical, testimonial, documentation and analytical cause - reason why something happened, effect - a conclusion may be quatifiable problems of assessing effectiveness professional judgement Figure 9.2 Performance audit Performance audit Performance audit - 4 methods data sources for effectiveness reviews, - citizen surveys, trained observer ratings, comparision of similar prgs, internal records, Egs 9.24 9.25 9.26 9.28 9.29 9.30 9.31 9.31 9.31 9.32 9.35 Q.1, Q.1O

Q.5

Effectiveness performance audit - key themes understanding performance audits

Performance audit from start to finish Materiality - performance audit Sufficiency - performance audit Documentation - performance audit Difference bet'n financial audit and performance audit Accountability and audits - performance audit Independence and quality control - performance audit

Q.15

Appoinment and removal of auditor general Policy issues - performance audit Performance audits - how are they selected Improved economy Improved efficiency Improved effectiveness Audit criteria - performance audit Criteria - egs - performance audit Audit considerations - performance audit Cause and effect Attribution - Performance audit Significance - Performance audit Economy, efficiency and effectiveness - techniques for examining Inputs/outputs review System based review Comparisions Effectivenss reviews

Q.9 Q.7, Q.14 Q.5 Q.8 Q.1 Q.3 Q.2

Management performance - performance audit Performance indicators Types of indicators - performance Inputs - Performance audit Outputs - performance audit Outcomes - performance audit Cost - effectiveness - ongoing monitoring Performance indicators - users of Performance indicators - attributes of meaningful PI Outcome indicators - effectiveness Service indicators - effectiveness Productivity indicators - efficiency Output indicators - activity level Cost - effectiveness indicators - effectiveness Performance audit process Project identification stage - Perform'ce audit process

considerations in assessing management performance relative: to targets/goals, to previous performance, to the performance of similar athorities. P I applied on: ongoing, periodic Inputs, outputs, outcomes, resources Egs. Egs. Egs. Performance audit parliament, public,media, client grps and research grps relevant, quantifiable, verifiable, free from bias, appropriate, fair presentation, balanced, cost effective egs egs egs egs egs 5 stages: Project identification stg, planning stg, audit conduct stg, reporting stg, follow up stg. Figure 9.4 1. select the org, prg or activity for audit, 2.Identify potential audit topics based on significance, risk to good mgt and potential benefits. 3. Gain an understanding of the org, prg or activity subject to audit, 4.Undertake preliminary study by identigying fundamental issues, 5. Prepare the preliminary study report, 6. Discuss the preliminary report, 7. Develop detailed audit criteria, 8. Develop audit plan including audit program 9. carry out audit procedures as defined in the audit prg, 10. analyse evidence and evaluate findings to develop conclusions and recommendations, 11. communicate summary of draft findings and proposed recommentations to the head of org and minister 12. report to the head of org, minster and parliament - assurance report content, assertion based rep and direct rep Performance audit Perfromance audit Follow up and report on conclusions and recommendations atleast once in 3 yrs, report to be transmitted to each house of parliament within 7 sitting days

9.37 9.39 9.40 9.41 9.41 9.41 9.42 9.42 9.42 9.43 9.43 9.43 9.43 9.43 9.44 9.45 Q.15

Q.4

Q.6

Planning stage - Perform'ce audit process. ASAE 3500.32

9.46

Q.12

Audit conduct stage - Perform'ce audit process Reporting stage - Perform'ce audit process Assertion based reporting Direct reporting Follow up stage - Perform'ce audit process Performance audit on the auditor general's office

9.47 9.49 9.51 9.51 9.52 9.52

MODULE 10 -OTHER ASSURANCE SERVICES AND INTERNAL AUDIT

Assurance Engagements - framework Assurance Engagements - nature Independence and Professional reputation Professional Judgement - Quality - expertise Survey of assurance services being provided 3 party rel'ship, subject matter, Criteria, Evidence collection, Written assurance report 10.5 10.5 10.6 10.7 10.7 Q.1 Q.2 Q.6 AUS 804 - P 10 The audit of prospective finan info AUS 804 P 9

Prospective financial information - assurance on Prospective financial information - guidance on ICEAW Non-Financial information - assurance on Environmental report Sustainability report Triple bottom line reporting - CPA Aus

Relevant, Understandable, Reliable, Comparable Environmental and Sustainability assurance

10.10 10.12 10.13 10.14 10.14 10.17

Q.10 Q.7

Inquiry, Observation, Inspection, Computation, Confirmation, Anal procedures

Q.8

Sustainability assurance - Frameworks for

10.18 ISAE 3000 - Ass Engmts other than audits or reviews of his fin info AA1000 - Assurance Std (AA1000AS)

Historical Financial Information Sustainability reporting - assurance on Sustainability assurance - recent surveys of Sustainability assurance - new developments Sustainability assurance Non-Financial information - Business Performance measurment Performance measurement assurance - criteria Key Performance measures Internal control - assurance Systems and Processes - assurance on COSO (1994) reporting to external parties

Eng acceptance, plg and per, imp or isae 3000, ontaining evidence, documentation, prepare ass rep Phase I, Phase II, insights and inadequacies Assurance on carbon emmission dis, ass on water accts reports subject matter, criteria, key per ind, evidence gathering, reporting on conculsion Ass'g the reliability of infor and ass'g the relevance of perf meas relevant, avoids perverse incentives, attributable, well defined, timely, reliable, comparable, verifiable 1st, 2nd, 3rd and 4th phase

10.19 10.20 10.22 10.23 10.25 10.28 10.29 10.31 10.32 10.32 10.33 Q.5 Q.3

Control environment Risk assessment Control activities Information and communication Monitoring COSO (1994) reporting guidelines Risk Management assurance Privacy assurance - Systems reliability Behaviour - assurance on Corporate governance assurance Continuous auditing Core competencies for potential assurance services Internal audit - overview audit committee Internal audit - engagement planning Internal audit - carrying out the engagement Internal audit - reporting

Integrity and ethical values, Commitment to competence, board of directors or audit committee, mgr phil and op style, org structure, assign ment of auth and resp, human res 10.34 10.36 10.39 10.39 10.40 10.41 10.42 10 principles 10.44 two forms 10.46 8 principles 10.47 direct and indirect reporting 10.49 customer focus, migration to higher val added infor, infor tech, pace of change and complexity, competition 10.54 Key issues 10.56 reporting 10.59 10.60 10.61 10.62

Q.4 Q.12 Q.6 Q.11

Q.13 Q.14 Q.15