Professional Documents
Culture Documents
Structure the Audit Problem: Define the objectives of the audit and identify the risks and factors
that may impact the achievement of those objectives. This includes determining the scope of the
audit and identifying relevant audit standards and regulations. Identify Consequences of
Decision: Consider the potential consequences of different decisions and evaluate the impact on
all stakeholders. This includes considering legal, ethical, and business implications. Assess Risks
and Uncertainties: Identify and evaluate risks and uncertainties associated with the audit
problem. This includes considering the likelihood of risks and the potential impact on the
financial statements. Evaluate Information or Audit Evidence Gathering Alternatives: Consider
alternative methods for gathering audit evidence and evaluate the strengths and weaknesses of
each method. Conduct Sensitivity Analysis: Perform sensitivity analysis to determine the impact
of different assumptions on the audit conclusions. Gather Information or Audit Evidence: Collect
and evaluate evidence to support the audit conclusions. This includes performing procedures to
obtain reasonable assurance that the financial statements are free from material misstatement.
Make Decision About the Audit Problem: Based on the results of the audit procedures and the
evaluation of audit evidence, make a decision about the audit problem and communicate the
findings to stakeholders. This framework emphasizes the importance of a risk-based approach
to auditing and the need for professional judgment and decision-making throughout the audit
process.
his is a comprehensive list of the steps involved in the audit opinion formulation process
as described in the 11th edition of "Auditing: A Risk-Based Approach" by Johnstone,
Gramling, and Rittenberg. The process includes: