Weeks 1-4

● Apply the CSQC/CAS quality-control standards to make client-acceptance (or continuance) decisions
● Make the subjective and difficult judgments involved in the client acceptance decision
● Identify and discuss factors that auditors commonly consider in making the acceptance decision
● Assess auditor business risk and justify a recommendation on client acceptance in the presence of
significant positive and negative factors
● Determine and justify performance materiality
● Use the audit risk model to identify and analyze audit risks at the financial statement and assertion levels
● Use analytical procedures to gain understanding of client and identify audit risks
● Use performance materiality and the results of risk assessment to plan the nature, extent, and timing of audit
work (i.e., develop an audit approach)
● Provide specific audit procedures needed to gather evidence concerning identified risks
● Identify and analyze accounting issues using appropriate financial reporting framework

Weeks 5-9
● Explain the connection between risk assessment and the design of internal control systems
● Identify controls with a company’s internal control system
● Specify the control objectives (or assertions) being met by specific internal controls
● Distinguish between internal controls and routine process activities
● Provide specific audit procedures needed to test identified internal controls
● Identify weaknesses in a company’s internal control system
● Explain the implications of internal control weaknesses
● Suggest improvements to the internal control system to overcome identified weaknesses
● Provide an overall conclusion on the effectiveness and efficiency of a company’s internal control system
● Design internal controls in an unconventional setting
● Assess the adequacy of an auditor’s risk assessments and other key audit conclusions
● Assess the sufficiency of audit evidence
● Assess the appropriateness of audit evidence
● Provide recommendations for correcting audit deficiencies
● Assess the audit of accounting estimates
● Describe the information auditors must include in their audit documentation
● Assess compliance with relevant ethical requirements by members of the engagement team
● Identify and explain ASPE-IFRS treatment differences

Week 10-12
● Understand the purpose of the Summary of Audit Differences
● Evaluate the materiality of misstatements using quantitative and qualitative factors
● Determine the impact of material misstatements and scope limitations on the audit opinion
● Describe an auditor’s responsibilities regarding events occurring subsequent to the balance sheet date
● Describe the impact of subsequent events and assess their impact on the auditor’s report
● Describe the impact of going-concern issues on the auditor’s report
● Describe the critical differences between a review engagement and an audit of historical financial
statements
● Assess the risks and issues associated with performing a review engagement
● Specify the review procedures required to address identified risks
● Assess the risks and issues associated with performing a due diligence engagement
● Specify the due diligence procedures required to address identified risks
● Identify potential special reports applicable to a client reporting engagement
● Choose a special report that is most reasonable/relevant to the client’s and users’ needs
 ● Identify and discuss the planning and other engagement issues associated with a special reporting
engagement
● Identify and analyze the major issues that need to be resolved to complete a special engagement
● Specify the procedures needed to address identified issues and risks

Major Components of an Audit Plan

· User analysis

· Materiality estimate

· Risk assessment

· Audit approach

· Analysis of accounting issues

· Audit procedures

Major Considerations when Making a Client Acceptance/Continuance Decision

• Does firm have the competenlce to perform engagement

• Does firm have the capabilities, time and resources to perform the engagement
• Can firm comply with ethical requirements, especially independence from client
• Does the client have integrity
• What is the client’s financial health based on review and preliminary analysis of FS
• What’s the preliminary assessment of risk of material misstatement and audit risk
• Are there business opportunities for the firm or manager/partner of firm (new service, new industry, starting a
client base, etc.)

Risks of Interest to an Auditor

Audit Risk​ is the risk that an auditor issues a clean opinion on financial statements containing a material
misstatement

Business Risk​ is the risk that a client will fail to achieve its objectives or execute its strategies

Auditor Business Risk​ is the risk that the auditor or firm will suffer harm from litigation, reputation decline, or costs
exceeding fees

Risk of Material Misstatement​ is the risk that the financial statements are misstated prior to the audit of the
statements

Financial Statement Level Risk ​is a risk that relates pervasively to the financial statements as a whole and potentially
affects many assertions

Inherent Risk​ is the risk that a material misstatement exists for an assertion at the account level before considering
the existence or effectiveness of the client’s internal controls

Control Risk​ is the risk that material misstatements for an assertion at the account level will not be prevented or
detected by internal controls
Detection Risk​ is the risk that the auditor will fail to detect material misstatements, should such misstatements exist

Client Business Risk​ is the risk that a client’s financial condition will deteriorate, potentially putting the going-concern
assumption in doubt.

Management Assertions

Existence​: All recorded assets, liabilities, equity exist at period end

Occurrence​: All recorded/disclosed transactions and events occurred during reporting period

Completeness​: All transactions, events, assets, liabilities, equity, and disclosures that should be recorded/disclosed
in the financial statements for the reporting period have been recorded/disclosed

Rights & Obligations​: All recorded assets and liabilities, and disclosed events and other matters legally pertain to
entity

Valuation & Allocation​: All assets, liabilities, equity, and disclosures are reported at appropriate amounts and
allocated to proper periods

Accuracy​: All recorded/disclosed transactions, events, other matters are reported accurately

Cut-Off​: All recorded transactions/events are reported in correct accounting period

Classification​: All transactions/events are recorded in proper accounts

Understandability​: All financial information and disclosures are clearly described and expressed

Audit Evidence

Inspection of documents​/​records​ from inside or outside the client

Physical examination of tangible assets​ by the auditor

Observation​ of process or procedure being performed by others

Enquiry​ of knowledgeable people from inside or outside the client

Confirmation​ of information directly from third party

Recalculation​ by the auditor to check mathematical accuracy

Reperformance​ by auditor of internal control procedures

Analytical procedures​ using relationships between financial and non-financial data to evaluate financial information

The Five Elements of an Internal Control System

Control Environment
• Communication/enforcement of integrity and ethical values
• Commitment to competence
• Strong corporate governance
• Management philosophy & operating style
• Organizational structure with strong lines of authority and responsibility
• Excellent HR policies and practices

Risk Assessment Process

• Identify and respond to business, financial reporting, and legal/regulatory risks
• Response should consider significance, likelihood, and management of risk
• Either initiate plans/procedures to mitigate specific risks, or decide to accept a risk due to cost or other
considerations

Information System (Control Objectives of the System)

• Identify and record all valid transactions
• Timely describe and classify transactions
• Properly measure monetary value of transactions
• Determine time period transaction occurred
• Properly present transactions & disclosures

Control Activities
• Authorization of events/transactions
• Performance reviews
• Application and general IT controls over information processing
• Security of assets and data
• Segregation of incompatible duties (authorizing, recording, custody)

Monitoring
• Must assess the quality of internal controls over time
• Regularly consider whether controls operating as intended
• Correct weaknesses on timely basis
• Modify controls appropriately for changes in conditions

Common Special Reporting Options

805: Audit of a Single Financial Statement or Specific Element of a Financial Statement

5815: Audit Report on Compliance with Agreements, Statutes, Regulations
9100: Results of Applying Specified Audit Procedures to FI other than FS
CSAE 3416: Reporting on Controls at a Service Organization
7600: Report on Application of Accounting Principles
8600: Review Engagement Report on Compliance with Agreements, Statutes, Regulations